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Series Prospectus dated 12 September 2014
CLOVERIE PUBLIC LIMITED COMPANY
(incorporated with limited liability in Ireland)
SERIES PROSPECTUS
Series No.: 2014-01
EUR 500,000,000 1.75 per cent. Fixed Rate Notes due 2024
secured over
EUR 500,000,000 in principal amount of
EUR 500,000,000 1.75 per cent. Senior Notes due 2024 of Zurich
Insurance Company Ltd
issued pursuant to its
Secured Note Issuance Programme
arranged by
CITIGROUP GLOBAL MARKETS LIMITED
The attention of investors is drawn to the section headed “Risk Factors”
starting on page 5 of this Series Prospectus
Managers
CITIGROUP
CRÉDIT AGRICOLE CIB
J.P. MORGAN
MORGAN STANLEY
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This Series Prospectus, under which the EUR 500,000,000 1.75 per cent. Fixed Rate Notes due
2024 (the “Notes”) are issued, incorporates by reference, and should be read in conjunction with,
the Base Prospectus dated 16 July 2014 (the “Base Prospectus”) relating to the Secured Note
Issuance Programme (the “Programme”) and the issuance by Cloverie Public Limited Company
(the “Issuer”) of secured notes under the Programme. Terms defined in the Base Prospectus have
the same meanings in this Series Prospectus. This Series Prospectus has been approved by the
Central Bank of Ireland (the “Central Bank”), as competent authority under Directive 2003/71/EC
(the “Prospectus Directive”). The Central Bank only approves this Series Prospectus as meeting
the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. This
Series Prospectus constitutes a Prospectus for the purposes of Regulation 13 of the Prospectus
(Directive 2003/71/EC) Regulations 2005 and Article 5 of the Prospectus Directive and for the
purpose of giving information with regard to the Issuer which is necessary to enable investors to
make an informed assessment of the assets and liabilities, financial position, profit and losses and
prospects of the Issuer. Application has been made to the Irish Stock Exchange for the Notes to be
admitted to the official list and trading on its regulated market. This Series Prospectus is to be read
in conjunction with all documents which are deemed to be incorporated herein by reference.
It is expected that the Notes will be rated A+ by Standard & Poor’s Credit Market Services Europe
Limited (‘‘S&P’’). The credit ratings included or referred to in this Series Prospectus have been
either issued or endorsed by S&P. S&P is established in the European Union and registered under
Regulation (EC) 1060/2009 on credit rating agencies. A rating is not a recommendation to buy, sell
or hold securities and may be subject to revision, suspension or withdrawal at any time by the
assigning rating agency.
The Appendices to this Series Prospectus form part of, and should be read together with, this
Series Prospectus.
If the Issuer is deemed to be a covered fund, then, in the absence of regulatory relief, the
provisions of the Volcker Rule and its related regulatory provisions will impact the ability of U.S.
banking institutions to hold an ownership interest in the Issuer or enter financial transactions with
the Issuer. Investors are required to independently consider the potential impact of the Volcker
Rule in respect of any investment in the Notes. See “Risk Factors – Risk Factors relating to the
market – Volcker Rule” below.
The delivery of this Series Prospectus at any time does not imply that any information contained
herein is correct at any time subsequent to the date hereof.
The Issuer accepts responsibility for the information contained in this Series Prospectus. To the
best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that
such is the case), the information contained in this Series Prospectus is in accordance with the
facts and does not omit anything likely to affect the import of such information.
The information in Appendix A comprises information reproduced from the Final Terms dated 12
September 2014 (the “Collateral Final Terms”) of the Collateral Notes (as defined in “Terms and
Conditions – The Security Arrangements”). The information in Appendix B comprises information
reproduced from the Collateral Base Prospectus (as defined below). The Issuer confirms that such
information has been accurately reproduced from the Collateral Final Terms published by the
Collateral Issuer (as defined in “Terms and Conditions – The Security Arrangements”) and the
Collateral Base Prospectus (as defined below). The Collateral Final Terms are to be read together
with the base prospectus dated 19 May 2014 relating to the USD 18,000,000,000 Euro Medium
Term Note Programme of Zurich Insurance Company Ltd, which constitutes a base prospectus for
the purposes of Directive 2003/71/EC (the “Collateral Base Prospectus”), which is set out at
Appendix B to this Series Prospectus.
So far as the Issuer is aware and is able to ascertain from information published by the Collateral
Issuer, no facts have been omitted from the Collateral Final Terms, read together with the
Collateral Base Prospectus, which would render the reproduced or incorporated information
inaccurate or misleading. No person is authorised to give any information or to make any
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representation not contained in this Series Prospectus and any information or representation not
so contained must not be relied upon as having been authorised by or on behalf of the Issuer or
the Managers. To the fullest extent permitted by law, the Issuer and the Managers accept no
responsibility whatsoever for any information not included in this Series Prospectus. The Issuer
and the Managers accordingly disclaim all and any liability whether arising in tort or contract or
otherwise (save as referred to above) which they might otherwise have in respect of any such
information. Neither the delivery of this Series Prospectus nor any sale made in connection
herewith shall, under any circumstances, create any implication (a) that there has been no change
in the affairs of the Issuer since the date hereof or the date upon which this Series Prospectus has
been most recently amended or supplemented or that there has been no adverse change in the
financial position of the Issuer since the date hereof or the date upon which this Series Prospectus
has been most recently amended or supplemented or (b) that any other publicly available
information relating to the Issuer, the Notes, the Collateral Notes or the Collateral Issuer is correct.
To the fullest extent permitted by law, the Managers accept no responsibility whatsoever for the
contents of this Series Prospectus or for any other statement made or purported to be made by
any Manager or on its behalf in connection with the Issuer, the Collateral Notes, the Collateral
Issuer or the issue and offering of the Notes. Each Manager accordingly disclaims all and any
liability whether arising in tort or contract or otherwise (save as referred to above) which it might
otherwise have in respect of this Series Prospectus or any such statement.
Furthermore, in relation to the issue of the Notes and save as required by all applicable laws, no
representation, warranty or undertaking, express or implied, is or will be made and no
responsibility or liability to any Noteholder is or will be accepted by the Collateral Issuer as to the
accuracy or completeness of the information contained in this Series Prospectus or any other
information provided by the Issuer in connection with the issue and offering of the Notes.
No person has been authorised to give any information or to make any representation other than
those contained in this Series Prospectus in connection with the issue and sale of the Notes and, if
given or made, such information or representation must not be relied upon as having been
authorised by the Issuer or the Managers.
The net proceeds of this issue (net of expenses) will be EUR 495,212,201.84 and will be applied
by the Issuer to purchase the Collateral Notes on the Issue Date (as defined herein) and to make
payment of certain fees, commission and expenses.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933 (the
“Securities Act”), the operator of the Issuer is not registered as a commodity pool operator under
the U.S. Commodity Exchange Act of 1936 and the rules of the Commodity Futures Trading
Commission thereunder (the “CFTC Rules”) and the Notes may not at any time be offered, sold or
resold within the United States or to or for the account or benefit of (i) U.S. persons (as such term
is defined under Rule 902(k)(1) of Regulation S under the Securities Act) or (ii) persons who are
not Non-United States persons (as such term is defined under CFTC Rule 4.7). For a description
of certain further restrictions on offers and sales of Notes and distribution of the Base Prospectus
and the Series Prospectus, see “Subscription and Sale and Transfer Restrictions” in the Base
Prospectus.
This Series Prospectus does not constitute, and may not be used for the purposes of, an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to
any person to whom it is unlawful to make such offer or solicitation, and no action is being taken to
permit an offering of the Notes or the distribution of this Series Prospectus in any jurisdiction where
such action is required.
The Notes may not be publicly offered, sold or advertised, directly or indirectly, in, into or from
Switzerland and will not be listed on the SIX Swiss Exchange or any other exchange or regulated
trading facility in Switzerland. Neither this Series Prospectus nor any other offering or marketing
material relating to the Notes constitutes (i) a prospectus as such term is understood pursuant to
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article 652a or article 1156 of the Swiss Code of Obligations, (ii) a listing prospectus within the
meaning of the listing rules of the SIX Swiss Exchange or any other regulated trading facility in
Switzerland, (iii) a simplified prospectus or a prospectus as such term is defined in the Swiss
Collective Investment Schemes Act or (iv) a prospectus or a supplementary prospectus pursuant
to the Prospectus Directive, and neither this Series Prospectus nor any other offering or marketing
material relating to the Notes may be publicly distributed or otherwise made publicly available in
Switzerland.
Neither this Series Prospectus nor any other offering and marketing material relating to the
offering, the Issuer or the Notes have been or will be filed with or approved by any Swiss
regulatory authority. The Notes are not subject to supervision by any Swiss regulatory authority,
including the Swiss Financial Market Supervisory Authority FINMA (“FINMA”), and investors in the
Notes will not benefit from protection or supervision by such authority.
In this Series Prospectus, unless otherwise specified or the context otherwise requires, references
to “U.S.$”, “USD” and “U.S. dollars” are to United States dollars and references to “EUR”, “euro”
and “€” are to the currency introduced on 1 January 1999 pursuant to the Treaty establishing the
European Community as amended by the Treaty on European Union.
The language of this Series Prospectus is English. Certain legislative references and technical
terms have been cited in their original language in order that the correct technical meaning may be
ascribed to them under applicable law.
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Table of Contents
Risk Factors ................................................................................................................................................ 5
Incorporation by Reference ....................................................................................................................... 13
Terms and Conditions ............................................................................................................................... 14
Schedule – Additional Amendments to the Base Conditions .................................................................... 26
Collateral Notes Summary ........................................................................................................................ 34
General Information .................................................................................................................................. 39
Appendix A – Final Terms of the Collateral Notes .................................................................................... 41
Appendix B – Collateral Base Prospectus ................................................................................................ 42
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Risk Factors
THE CONSIDERATIONS SET OUT BELOW ARE NOT, AND ARE NOT INTENDED TO BE, A
COMPREHENSIVE LIST OF ALL CONSIDERATIONS RELEVANT TO A DECISION TO PURCHASE
OR HOLD ANY NOTES.
PROSPECTIVE INVESTORS SHOULD ALSO READ THE BASE PROSPECTUS, THE RISK
FACTORS SET OUT THEREIN AND THE DETAILED INFORMATION SET OUT ELSEWHERE IN
THIS SERIES PROSPECTUS.
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Notes
issued under the Programme. The Issuer is not in a position to express a view on the likelihood of any
contingency highlighted by a risk factor occurring.
Factors which the Issuer believes may be material for the purpose of assessing the market risks
associated with Notes issued under the Programme are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in
Notes issued under the Programme, but the inability of the Issuer to pay interest, principal or other
amounts on or in connection with any Notes may occur for other reasons and the Issuer does not
represent that the statements below regarding the risks of holding any Notes are exhaustive. Prospective
investors should also read the detailed information set out elsewhere in this Series Prospectus (including
any documents incorporated by reference herein) and reach their own views prior to making any
investment decision.
General
The Notes
The Notes are complex instruments that involve substantial risks and are suitable only for sophisticated
investors who have sufficient knowledge and experience and access to such professional advisers as
they shall consider necessary in order to make their own evaluation of the risks and the merits of such an
investment (including without limitation the tax, accounting, credit, legal, regulatory and financial
implications for them of such an investment) and who have considered the suitability of such Notes in
light of their own circumstances and financial condition. Prospective investors should ensure that they
understand the nature of the risks posed by an investment in the Notes, and the extent of their exposure
as a result of such investment in the Notes and before making an investment decision, should consider
carefully all of the information set forth in the Base Prospectus incorporated by reference herein and the
Collateral Base Prospectus and the Collateral Final Terms appended hereto and, in particular, the
considerations set forth below. Owing to the structured nature of the Notes, their price may be more
volatile than that of unstructured securities.
Any investment in the Notes does not have the status of a bank deposit and is not within the scope of
any deposit protection scheme.
No fiduciary role
None of the Issuer, the Managers, the Custodian, the Trustee, the Agents (excluding the Issuer, the
“Transaction Parties”) or any of their respective affiliates is acting as an investment adviser, and none
of them (other than the Trustee) assumes any fiduciary obligation to any purchaser of Notes or any other
party, including the Issuer.
None of the Issuer or the Transaction Parties or any of their respective affiliates assumes any
responsibility for conducting or failing to conduct any investigation into the business, financial condition,
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prospects, creditworthiness, status and/or affairs of any issuer or obligor of any Collateral or the terms
thereof.
Investors may not rely on the views or advice of the Issuer or the Transaction Parties for any information
in relation to any person other than such Issuer, Manager, Custodian, Trustee or Agent respectively.
Potential conflicts of interest
The Managers and their affiliates have engaged in, or may in the future engage in, investment banking
and other commercial dealings in the ordinary course of business with the Issuer, the Collateral Issuer or
their respective affiliates. They have received, or may in the future receive, customary fees and
commissions for these transactions.
In addition, in the ordinary course of their business activities, the Managers and their affiliates may make
or hold a broad array of investments and actively trade debt and equity securities (or related derivative
securities) and financial instruments (including bank loans) for their own account and for the accounts of
their customers. Such investments and securities activities may involve securities and/or instruments of
the Issuer, the Collateral Issuer or their respective affiliates. Certain of the Managers or their affiliates
that have a lending relationship with the Issuer, the Collateral Issuer or their respective affiliates routinely
hedge their credit exposure to the Issuer, the Collateral Issuer or their respective affiliates consistent with
their customary risk management policies. Typically, such Managers and their affiliates would hedge
such exposure by entering into transactions which consist of either the purchase of credit default swaps
or the creation of short positions in the Issuer’s, the Collateral Issuer's or their respective affiliates’
securities, including potentially the Notes offered hereby. Any such short positions could adversely affect
future trading prices of the Notes offered hereby. The Managers and their affiliates may also make
investment recommendations and/or publish or express independent research views in respect of such
securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or
short positions in such securities and instruments.
In addition, in connection with the exercise of its functions, the Trustee shall have regard to the interests
of the Noteholders as a class and shall not have regard to the consequences of such exercise for
individual Noteholders and the Trustee shall not be entitled to require, nor shall any Noteholder be
entitled to claim, from the Issuer any indemnification or payment in respect of any tax consequence of
any such exercise upon individual Noteholders.
Risk relating to the Notes
No gross-up on payments under the Notes
In the event that any withholding tax or deduction for tax is imposed on payments on the Notes, the
Noteholders will not be entitled to receive grossed-up amounts to compensate for such withholding tax
nor be reimbursed for the amount of any shortfall and no Event of Default shall occur as a result of any
such withholding or deduction (but see “Earlier redemption for tax or legal reasons” below).
Earlier redemption for tax or legal reasons
Upon giving notice to the Trustee, the Issuer may in certain circumstances, at the direction of the
Noteholders by an Extraordinary Resolution, be required to redeem all Notes earlier than the Maturity
Date for specified tax or legal reasons, including as a result of actual or potential withholding on account
of certain provisions of U.S. federal income tax law (commonly known as “FATCA”), as detailed in
Condition 7.3. If the Issuer redeems the Notes early, the Issuer will, if and to the extent permitted by
applicable law, redeem the Notes at their Early Redemption Amount as specified in the Conditions. Such
Early Redemption Amount is not principal protected and will be calculated in accordance with the
Conditions.
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As described in “No gross-up on payments under the Notes” above, Noteholders will not be entitled to be
reimbursed or receive grossed-up amounts in the event that any withholding tax or deduction tax is
imposed on payments of the Notes. With respect to the Collateral Notes, although the terms of the
Collateral Notes provide that, in the event of any withholding or deduction on account of Swiss tax being
required by Swiss law, the Collateral Issuer shall, subject to certain exceptions, pay additional amounts
so that the net amount received by the holders of the Collateral Notes shall equal the amount which
would have been received by such holder in the absence of such withholding or deduction, such an
obligation in respect of interest may contravene Swiss legislation, be null and void and not enforceable in
Switzerland. In that event the amount received by the Issuer, as the holder of the Collateral Notes, and
the corresponding amounts payable by the Issuer to the holders of the Notes would be reduced by any
such withholding or deduction.
If the Collateral Issuer becomes obliged to pay additional amounts in respect of the Collateral Notes
following the imposition of any withholding or deduction in respect of payments of principal and interest
under the Collateral Notes as a result of a change in, or amendment to, the laws and regulations of
Switzerland, the Collateral Issuer may redeem all of the Collateral Notes, which will result in the
redemption of all of the Notes (notwithstanding any substitution arrangements in Condition 7.3
(Redemption for taxation and other reasons) and described below) in accordance with Condition 7.2
(Mandatory Redemption).
Condition 7.3 provides that if the Issuer is required by Irish law to make any withholding or deduction or
payments to be made by it in respect of the Notes or if the Issuer is unable to receive any payment due
in respect of the Collateral Notes in full on the due date therefor without deduction for or on account of
any withholding tax or duties or charges of whatsoever nature then the Issuer shall so inform the Trustee,
and shall use its best endeavours to arrange the substitution of a company incorporated in another
jurisdiction approved beforehand in writing by the Trustee (provided that such substitution does not have
an adverse effect on any rating awarded to any Series of Notes then outstanding at the time of such
substitution) as the principal obligor of the Notes or to change (provided that no such change has an
adverse effect on any rating awarded to any Series of Notes then outstanding at the time of such
change) its residence for taxation purposes to another jurisdiction approved beforehand in writing by the
Trustee. If it is unable to arrange such substitution or change before the next payment is due in respect
of the Notes then the Issuer is obliged to give a notice that it will redeem the Notes unless the Trustee
shall certify to the Issuer that it considers in its absolute discretion that it is in the best interests of the
Noteholders that such notice be delayed or not given or an Extraordinary Resolution of the Noteholders
shall otherwise direct. Condition 7.3.4 provides that if the Issuer, on the occasion of the next payment
due in respect of the Notes, would be required by FATCA to withhold or account for tax or would suffer
tax in accordance with FATCA in respect of its income so that it would be unable to make payment of the
full amount due; or is or will be unable to receive any payment due in respect of the Collateral forming
part of the Mortgaged Property in full on the due date therefor without deduction for or on account of any
withholding tax, back-up withholding or other tax, duties or charges of whatsoever nature on account of
FATCA, then the Issuer shall promptly inform the Trustee and the Noteholders and the Noteholders may
direct the Issuer by way of Extraordinary Resolution to redeem the Notes. Notwithstanding the previous
sentence, if such taxes under FATCA arise from the failure of a Noteholder to comply with its obligations
to provide information and documentation to the Issuer, such Noteholder shall bear the economic burden
of such tax, other Noteholders would receive amounts due to them and the Notes would not be
redeemed. If the Notes become subject to redemption in such circumstances it is likely that the amount
realised through the sale of the Collateral Notes will be less than the principal amount of the Notes.
Managers’ Security
The proceeds of the Managers’ Security (as defined in “Terms and Conditions – The Security
Arrangements”) will, in the event that the Managers’ Security becomes enforceable, be held by Citicorp
Trustee Company Limited in its capacity as Managers’ Trustee (the “Managers’ Trustee”) on behalf of
8
itself and the Managers and applied in respect of any Manager’s Claims (as defined in “Terms and
Conditions – The Security Arrangements”). Noteholders have no direct or indirect interest in the
Managers’ Security and will not be entitled to the proceeds of enforcement of the Managers’ Security.
Provision of information
None of the Issuer, the Trustee, the Managers’ Trustee, any Manager nor any affiliate of such persons
makes any representation as to the credit quality of the Collateral Issuer. Any of such persons may have
acquired, or during the term of the Notes may acquire, non-public information with respect to the
Collateral Issuer. None of such persons is under any obligation to make such information directly
available to Noteholders. None of such persons is under any obligation to make available any information
relating to, or keep under review on the Noteholders’ behalf, the business, financial condition, prospects,
creditworthiness or state of affairs of the Collateral Issuer or conduct any investigation or due diligence
into the Collateral Notes (either with respect to the Collateral Issuer, or the terms and conditions of the
Collateral Notes).
Risks relating to the Collateral Notes
Potential investors should note that the performance of the Notes is linked to the performance of the
Collateral Notes and should make their own investigations in respect of the Collateral Issuer and the
Collateral Notes, including having regard to the disclosure, risks (including specific risk factors therein)
and investment considerations set out in the Collateral Base Prospectus and the Collateral Final Terms.
Collateral Notes
The Collateral Notes constitute direct, unconditional, unsubordinated and, subject to the provision of
Condition 3(c) (Negative Pledge) of the Collateral Notes Conditions, unsecured obligations of the
Collateral Issuer and (subject as aforesaid) will rank pari passu, without any preference among
themselves save for statutory preferred exceptions, with all other outstanding unsecured and
unsubordinated obligations of the Collateral Issuer, present and future, but, in the event of insolvency,
only to the extent permitted by applicable laws relating to creditors’ rights.
Exposure to the market value of the Collateral Notes
Noteholders may be exposed to the market price of the Collateral Notes. The Issuer, the Trustee (in
connection with the realisation or enforcement of the security for the Notes) or the Disposal Agent may in
certain circumstances have to effect the sale of the Collateral Notes to fund the Issuer’s payment
obligations. The market price of the Collateral Notes will generally fluctuate with, among other things, the
liquidity and volatility of the financial markets, general economic conditions, domestic and international
political events, developments or trends in a particular industry and the financial condition of the
Collateral Issuer.
Additionally, the Collateral Notes are Restricted Notes (as defined in the Collateral Notes Conditions) and
therefore, the transfer of the Collateral Notes is subject to certain restrictions, including but not limited to
the restrictions set out in Condition 10(j) (Restrictions on Transfer of Certain Notes) and Condition 10(k)
(Grants of Security) of the Collateral Notes Conditions (the “Collateral Notes Transfer Restrictions”). In
particular the Collateral Notes can only be transferred to Qualifying Banks or one single Permitted Non-
Qualifying Lender (each as defined in the Collateral Notes Conditions). The Collateral Notes are not
listed or admitted to trading on any exchange and have not been accepted for clearance through any
clearing system. As a result, there will be no established trading market in the Collateral Notes and the
Collateral Notes will be illiquid. The illiquidity of the Collateral Notes may have a severely adverse effect
on the market value of the Collateral Notes.
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In certain circumstances (as more specifically set out in the Agency Agreement), if the Issuer is required
to sell the Collateral Notes in order to make a payment on the Notes, Citigroup Global Markets Limited in
its capacity as Disposal Agent (the “Disposal Agent”) is required, provided that it can do so in
accordance with the Collateral Notes Transfer Restrictions, to purchase the Collateral Notes if the
Disposal Agent is unable to obtain any other firm bid quotes from purchasers qualified to purchase the
Collateral Notes within a specified period. Investors should note that the purchase price to be paid in
connection with any such purchase will be based on the current market value of the Collateral Notes as
determined by Citibank, N.A. in its sole and absolute discretion.
Payments on the Notes linked to payments on the Collateral Notes
Investors should note that the performance of the Notes is linked to the performance of the Collateral
Notes. Any event that causes the Collateral Issuer not to make all or part of any scheduled payments on
the Collateral Notes or to delay any such payments will result in corresponding reductions and delays in
respect of principal and interest payable in respect of the Notes. The Notes may also redeem earlier than
anticipated due to tax events and other events affecting the Collateral Notes and/or the Collateral Issuer,
all as more particularly set out in the Collateral Final Terms and the Collateral Base Prospectus. Certain
of these events may cause significant losses to Noteholders and may result in the Notes paying no
interest and/or redeeming at zero.
Investors should also note that if the Collateral Notes are redeemed in breach of Condition 6(c)
(Redemption for Tax Reasons) of the Collateral Notes Conditions, the amounts so paid to any holder of
the Collateral Notes must be repaid to the Collateral Issuer by such holder irrespective of any agreement
to the contrary, subject to certain exceptions set out in the Collateral Notes Conditions. Any such event
that results in repayment being made will lead to corresponding reductions and/or repayments in respect
of any redemption amounts paid or payable in respect of the Notes.
The Noteholders will have no right to physical delivery of the Collateral Notes under the terms of
the Notes. Any enforcement of security over the Collateral Notes is subject to the restrictions set
forth in the Collateral Notes Conditions. These transfer restrictions severely limit the potential
transferees of the Collateral Notes.
No withholding and early redemption
The Collateral Notes Conditions provide that, subject to certain exemptions, the Collateral Issuer shall
make all payments of principal and interest on the Collateral Notes, free of any withholding or deduction
for or on account of any other taxes, duties or assessments or governmental charges in Switzerland
unless such withholding or deduction is required by law. The Issuer and the Managers have received a
legal opinion from Swiss counsel of the Collateral Issuer that the Collateral Issuer is not at the date of
issue of the Collateral Notes required by law to make such deduction or withholding. The Collateral
Issuer has obtained a tax ruling from the relevant Swiss authorities that no Swiss tax withholding or
deduction will be required to be made by it in respect of payments due to be made by it to the Issuer
under the Collateral Notes. However, there can be no assurance as to the future impact of any possible
administrative or judicial decision or change to any relevant Swiss law and/or administrative practice after
the date of issue of the relevant Collateral Notes.
Although the Collateral Notes provide for the payments of additional amounts to be paid by the Collateral
Issuer if the Collateral Issuer becomes obliged by Swiss law to make any withholding or deduction in
respect of payments of principal and interest under the Collateral Notes, the obligation to pay such
additional amounts may be null and void and not be enforceable under Swiss law. In that event, the
Notes may become subject to redemption in such circumstances and may result in amounts payable to
Noteholders being less than their principal amount. See "Risks relating to the Notes – Early redemption
for tax or legal reasons”.
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If the Collateral Issuer becomes obliged to pay additional amounts in respect of the Collateral Notes
pursuant to the imposition of any withholding or deduction in respect of payments of principal and interest
under the Collateral Notes as a result of a change in, or amendment to the laws and regulations of
Switzerland, the Collateral Issuer may redeem all of the Collateral Notes which will result in the
redemption of all of the Notes (notwithstanding the substitution arrangements in Condition 7.3) in
accordance with Condition 7.2 (Mandatory Redemption).
Purchase, Exchange or Retirement of Notes: Collateral Tender Offers and Collateral
Exchange Offers
The terms of the Notes provide that in certain circumstances (as set out in the Special Conditions of
Condition 7.4 (Purchases)), the Issuer may participate in a Collateral Tender Offer or a Collateral
Exchange Offer (each as defined in the Special Conditions) of the Collateral Issuer with respect to the
Collateral Notes. If, in such circumstances, the Collateral Issuer defaults in the performance of its
payment or delivery obligations under the terms of any such Collateral Tender Offer or Collateral
Exchange Offer, then the Issuer will not be able to satisfy its corresponding payment or delivery
obligations to Noteholders in respect of any corresponding Cloverie Tender Offer or Cloverie Exchange
Offer (each as defined in the Special Conditions). Any failure by the Issuer to make a payment or delivery
due in connection with any Cloverie Tender Offer or Cloverie Exchange Offer shall constitute a default in
payment in respect of the Notes for the purposes of Condition 11.1, leading to the security for the Notes
becoming enforceable.
Accordingly, Noteholders must recognise that they will be exposed to the risk of default by the Collateral
Issuer in respect of any Collateral Tender Offer or Collateral Exchange Offer, regardless of whether or
not they participate in any corresponding Cloverie Tender Offer or Cloverie Exchange Offer. Any Cloverie
Tender Offer or Cloverie Exchange Offer is subject to any terms or conditions required by the Trustee
and, for so long as the Notes are listed on the Official List of the Irish Stock Exchange and admitted to
trading on the regulated market of the Irish Stock Exchange, all applicable rules and regulations of the
Irish Stock Exchange, and to notification to S&P.
Exercise of rights under Collateral Notes
Condition 13.1 provides that, other than in circumstances involving a Collateral Tender Offer or a
Collateral Exchange Offer, which are subject to the Special Conditions of Condition 7.4 (Purchases), the
Issuer may exercise any rights in its capacity as holder of the Collateral Notes pursuant to the consent of
the Trustee or the authority of an Extraordinary Resolution of the Noteholders and, if such direction is
given, the Issuer will act only in accordance with such direction (as more specifically set out in the Trust
Deed). In particular, the Issuer will not attend or vote at any meeting of holders of the Collateral Notes, or
give any consent or notification or make any declaration in relation to the Collateral Notes, unless it shall
have been so requested by the Trustee or by any Extraordinary Resolution of the Noteholders.
In addition, the Issuer shall, if so directed in writing by the holders of at least one-fifth in principal amount
of the Notes then outstanding, or if so directed by an Extraordinary Resolution of the Noteholders (in
each case, a “Noteholder Direction”) (subject in each case to its being indemnified to its satisfaction),
exercise any rights in its capacity as holder of the Collateral Notes (including to direct the trustee in
respect of the Collateral Notes to enforce the terms of the Collateral Notes as contemplated thereby) or
its right under the Purchase Agreement to acquire the Collateral Notes in accordance with such direction
(as more specifically set out in the Trust Deed).
At any time after the security for the Notes has become enforceable, Citigroup Global Markets
Deutschland AG in its capacity as Enforcement Agent (the “Enforcement Agent”) shall, if the Issuer is
directed to do so by any Noteholder Direction (subject in each case to the Enforcement Agent being
indemnified and/or secured to its satisfaction), exercise on behalf of the Issuer as the Issuer’s agent any
rights of the Issuer in the Issuer’s capacity as holder of the Collateral Notes (including to direct the
11
trustee in respect of the Collateral Notes to enforce the terms of the Collateral Notes as contemplated
thereby) or the Issuer's right under the Purchase Agreement to acquire the Collateral Notes and the
Enforcement Agent will act only in accordance with any Noteholder Direction (as more specifically set out
in the Trust Deed).
Without prejudice to the foregoing, in no circumstances shall the Trustee be permitted when acting in its
capacity as trustee for the Noteholders and the other secured parties (including the Managers), nor shall
the Noteholders and the other secured parties (including the Managers) (when acting in their respective
capacities) be permitted, to take any action against the Collateral Issuer or enforce any claim that the
Issuer may have against the Collateral Issuer under the Collateral Notes or the Purchase Agreement or
otherwise whether before, upon, or after any security created by or pursuant to the Trust Deed becoming
enforceable.
Enforcement of the rights that the Issuer has under the Collateral Notes through the Issuer or the
Enforcement Agent on behalf of the Issuer, as the Issuer’s agent, whether prior to or after the security
created in respect of the Notes has become enforceable, may be subject to delay pending receipt of
relevant Noteholder Directions.
Early redemption for Collateral default
If any of the Collateral Notes become repayable or become capable of being declared due and payable
prior to their stated date of maturity or there is a payment default in respect of any of the Collateral
Notes, the Issuer may be required to redeem the Notes in whole or in part on the basis set out in
Condition 7.2. The Notes are not principal protected in such circumstances and the amount payable to
Noteholders will be calculated in accordance with the Conditions.
Risks relating to business relationships and capacity of Citigroup Global Markets
Limited (“Citi”)
The Managers, the Custodian, the Disposal Agent, the Enforcement Agent, the Calculation Agent, the
Registrar and any of their affiliates may have existing or future business relationships with the Collateral
Issuer (including, but not limited to, lending, depository, risk management, advisory and banking
relationships) and will pursue actions and take steps that they deem or it deems necessary or
appropriate to protect their or its interests arising therefrom without regard to the consequences for a
Noteholder. In addition, the Managers, the Custodian, the Disposal Agent, the Calculation Agent, the
Registrar and any of their affiliates may make a market or hold positions in respect of any of the
Collateral Notes. From time to time, the Managers, the Custodian, the Disposal Agent, the Enforcement
Agent, the Calculation Agent, the Registrar and any of their affiliates may own significant amounts of
Notes.
Citi and its affiliates may act in a number of capacities in respect of the Notes including, without
limitation, Manager, Disposal Agent, Enforcement Agent, Calculation Agent and the Registrar. Citi and its
affiliates acting in such capacities in connection with such Notes shall have only the duties and
responsibilities expressly agreed to by such entities in the relevant capacity and shall not, by virtue of
acting in any other capacity, be deemed to have other duties or responsibilities or be deemed to hold a
standard of care other than as expressly provided with respect to each such capacity. Citi and its
affiliates, including the Trustee and the Managers’ Trustee, in their various capacities in connection with
the Notes may enter into business dealings, from which they may derive revenues and profits in addition
to any fees, without any duty to account therefor.
12
Risk relating to the market
Volcker Rule
Section 619 of the U.S. Dodd-Frank Act (the “Volcker Rule”), amongst other things, imposes significant
restrictions and conditions on a banking entity’s ability to acquire or retain any equity, partnership or
other ownership interest in, or sponsor, any “hedge fund” or “private equity fund”, together “covered
funds”, each as defined in the rule. The Volcker Rule imposes a prohibition on such ownership or
sponsorship, but there are a number of exceptions to that prohibition.
An “ownership interest” is defined widely and may arise through a holder's exposure to the profit and
losses of the covered fund, as well as through any right of the holder to participate in the selection of an
investment advisor, manager or board of directors of the covered fund. Accordingly the Notes may
constitute ownership interests.
A “covered fund” is defined widely, and includes any issuer which would be an investment company
under the Investment Company Act 1940 (the “ICA”) but is exempt from registration under section 3(c)(1)
or 3(c)(7) of that Act. Accordingly, the Issuer may be a covered fund.
For the avoidance of doubt, if the Issuer is deemed to be a “covered fund,” then, in the absence of
regulatory relief, the provisions of the Volcker Rule and its related regulatory provisions will impact the
ability of certain banking institutions to hold an ownership interest in the Issuer. If Citi is considered the
“sponsor” of the Issuer under the Volcker Rule, Citi may be able to rely on an exception from the Volcker
Rule’s prohibition on covered fund sponsorship by “banking entities” to continue in its role as the
Programme’s arranger. Reliance on such an exception may, however, impose significant restrictions on
Citi and its affiliates’ ability to enter into certain types of financial transactions, including derivative
transactions, with the Issuer. This could adversely impact the ability of Citi to enter into new transactions
with the Issuer and may require amendments to certain existing transactions and arrangements.
Any entity that is a “banking entity” as defined under the Volcker Rule and is considering an investment
in ownership interests of the Issuer should consider the potential impact of the Volcker Rule in respect of
such investment and on its portfolio generally.
13
Incorporation by Reference
The provisions of the Base Prospectus, which constitutes a Base Prospectus for the purposes of the
Prospectus Directive, shall be deemed to be incorporated into and form part of this Series Prospectus in
their entirety, save that any statement contained in the Base Prospectus shall be deemed to be modified
or superseded for the purpose of this Series Prospectus to the extent that a statement contained herein
modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any
statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Series Prospectus.
This Series Prospectus must be read in conjunction with the Base Prospectus and the other documents
deemed to be incorporated by reference herein and full information on the Issuer and the offer of the
Notes is only available on the basis of the combination of the provisions set out within this document, the
Base Prospectus and the other documents deemed to be incorporated by reference herein.
The Base Prospectus (which includes the Issuer’s audited financial statements in respect of its financial
year ending 31 December 2012 and 31 December 2011) is available for viewing at, and copies may be
obtained free of charge from, the office of the Issuing and Paying Agent and the office of the Issuer.
As at the Issue Date the Base Prospectus is also available for viewing on the website of the Irish Stock
Exchange using the following link:
http://www.ise.ie/debt_documents/Secured%20Note%20Issuance%20Programme.pdf
The information contained in the audited financial statements (including the auditors’ report thereon and
notes thereto) of the Collateral Issuer, as included in the Collateral Issuer’s annual reports in respect of
the years ended 2013 and 2012, which have been filed with the CSSF and published and are available
for viewing on the website of the Luxembourg Stock Exchange using the link given below (the income
statements being set out on page 169 and 171 respectively, of the 2013 and 2012 annual reports; the
balance sheets being set out on pages 170 to 171 and 172 to 173 respectively, of the 2013 and 2012
annual reports; the notes to the financial statements being set out on pages 172 to 183 and 174 to 183
respectively, of the 2013 and 2012 annual reports; and the auditors’ report being set out on pages 184 to
185 of each of the 2013 and 2012 annual reports), is incorporated by reference into and forms part of this
Series Prospectus:
https://www.bourse.lu/instrument/listdocuments?cdVal=210513&cdTypeVal=OBL
14
Terms and Conditions
The terms and conditions of the Notes shall consist of the terms and conditions (the “Base Conditions”)
set out in the Base Prospectus dated 16 July 2014 (the “Base Prospectus”), as amended or
supplemented below (including in the Schedule hereto) (the “Conditions”). References in the Base
Prospectus and in the Conditions to “Final Terms” shall be deemed to refer to the terms set out below
(including the Schedule hereto).
Provisions appearing on the face of the Notes
1 Issuer: Cloverie Public Limited Company
2 Relevant Dealer/Lead Manager
(including, if Syndicated Issue,
Managers):
Pursuant to a Syndication Agreement dated 12
September 2014 (the “Syndication Agreement”)
between Citigroup Global Markets Limited (“CGML”, and
in such capacity, a “Manager”), Crédit Agricole
Corporate and Investment Bank (“Crédit Agricole CIB”,
and in such capacity, a “Manager”), J.P. Morgan
Securities plc (“J.P.Morgan”, and in such capacity, a
“Manager”), Morgan Stanley & Co. International plc
(“Morgan Stanley”, and in such capacity, a “Manager”
and, together with CGML, Crédit Agricole CIB and
J.P.Morgan, the “Managers”) and the Issuer, the
Managers have agreed, subject to the satisfaction of
certain conditions, to subscribe for the Notes at the Issue
Price.
3 Series No: 2014-01
4 Tranche No: 1
5 ISIN: XS1109950755
6 Common Code: 110995075
7 Currency (or Currencies in the
case of Dual Currency Notes):
Euro (“EUR”)
8 Principal Amount:
(i) Series: EUR 500,000,000
(ii) Tranche: EUR 500,000,000
9 (i) Issue Date: 16 September 2014
(ii) Date Board approval for
issuance of Notes obtained:
On or around 11 September 2014
10 Issue Price: 99.347 per cent.
Provisions appearing on the back of the Notes
11 Form: Registered
12 Denomination(s): EUR 100,000 and integral multiples of EUR 1,000 above
such amount up to and including EUR 199,000. No
Notes in definitive form will be issued with a
denomination above EUR 199,000 (reference to a Note's
15
pro rata share of any amount means a proportion of such
amount equal to the proportion which the Denomination
of such Note bears to the aggregate Denominations of all
Notes then outstanding).
13 Status: Secured and limited recourse obligations of the Issuer,
secured as provided below.
14 Interest Commencement Date (if
different from Issue Date):
See Schedule.
15 Interest Basis: The Notes are Fixed Interest Rate Notes. See Schedule.
16 Interest Rate: The interest payable in respect of the Notes is linked to
interest payments in respect of the Collateral Notes (as
defined in paragraph 71(a) below). Any event that
causes the Collateral Issuer (as defined in paragraph
71(a) below) not to make all or part of any scheduled
interest payments in respect of the Collateral Notes, or to
delay any such scheduled interest payments, or any
decision by the Collateral Issuer not to make all or any
part of any scheduled interest payments or to delay any
such scheduled interest payments, will result in
corresponding reductions or delays to the interest
payable in respect of the Notes.
If the Collateral Notes are not subject to any such
reductions or delays and subject as provided in
Condition 6.1, each Note will pay interest on the Interest
Payment Date (as defined in the Schedule) that is, or is
the Relevant Business Day immediately following, each
Scheduled Collateral Interest Payment Date, at the
applicable Collateral Rate of Interest.
“Collateral Base Prospectus” means the base
prospectus dated 19 May 2014 relating to the USD
18,000,000,000 Euro Medium Term Note Programme of
the Collateral Issuer, which is set out at Appendix B to
this Series Prospectus.
“Collateral Final Terms” means the Final Terms of the
Collateral Notes, which are reproduced in Appendix A to
this Series Prospectus.
“Collateral Notes Conditions” means the detailed terms
and conditions of the Collateral Notes, set out in the
“Terms and Conditions of the Senior Notes, Dated
Subordinated Notes and Undated Subordinated Notes”
in the Collateral Base Prospectus, as amended and
supplemented by the Collateral Final Terms.
“Collateral Rate of Interest” means the applicable “Rate
of Interest” (as defined in the Collateral Notes
Conditions), being 1.75 per cent. per annum.
16
“Scheduled Collateral Interest Payment Date” means
16 September in each year from and including 16
September 2015.
17 Interest Payment Date(s): See Schedule
18 Relevant Time (Floating Rate
Notes):
Not Applicable
19 Determination Date(s) (if
applicable):
Not Applicable
20 Interest Determination Date
(Floating Rate Notes):
Not Applicable
21 Primary Source for Floating
Rate:
Not Applicable
22 Reference Banks (Floating Rate
Notes):
Not Applicable
23 Relevant Financial Centre
(Floating Rate Notes):
Not Applicable
24 Benchmark: Not Applicable
25 Broken Amount (Fixed Rate
Notes):
Not Applicable
26 Representative Amount (Floating
Rate Notes):
Not Applicable
27 Relevant Currency (Floating
Rate Notes):
Not Applicable
28 Effective Date (Floating Rate
Notes):
Not Applicable
29 Specified Duration (Floating Rate
Notes):
Not Applicable
30 Margin (Floating Rate Notes): Not Applicable
31 Rate Multiplier (if applicable): Not Applicable
32 Maximum/Minimum Interest Rate
(if applicable):
Not Applicable
33 Maximum/Minimum Instalment
Amount (if applicable):
Not Applicable
34 Maximum/Minimum Redemption
Amount (if applicable):
Not Applicable
35 Interest Amount (Fixed Rate
Notes):
See Schedule
36 Day Count Fraction: Not Applicable
37 Interest Period Date(s) (if Not Applicable
17
applicable):
Provisions relating to redemption
38 Redemption Amount:
(a) Redemption Amount
payable on final maturity
pursuant to Condition
7.1:
Final Redemption Amount
(b) Redemption Amount
payable on mandatory
redemption pursuant to
Condition 7.2:
Early Redemption Amount
(c) Redemption Amount
payable on mandatory
redemption pursuant to
Condition 7.3:
Early Redemption Amount
(d) Redemption Amount
payable on exercise of
Issuer’s option pursuant
to Condition 7.6:
Not Applicable
(e) Redemption Amount
payable on exercise of
Noteholder's option
pursuant to Condition
7.7:
Not Applicable
39 Maturity Date: 16 September 2024
40 Redemption for taxation reasons
permitted on days other than
Interest Payment Dates:
Yes
41 Index/Formula (if applicable): Not Applicable
42 Calculation Agent: Citibank, N.A., London Branch
43 Dual Currency Notes: Not Applicable
44 Partly-Paid Notes: Not Applicable
45 Amortisation Yield (Zero Coupon
Notes):
Not Applicable
46 Terms of redemption at the
option of the Issuer or other
Issuer’s option (if applicable):
Not Applicable
47 Terms of redemption at the
option of the Noteholders or
Not Applicable
18
other Noteholders’ Option (if
applicable):
48 Issuer’s Option Period: Not Applicable
49 Noteholders’ Option Period: Not Applicable
50 Instalment Date(s) (if applicable): Not Applicable
51 Instalment Amount(s) (if
applicable):
Not Applicable
52 Unmatured Coupons to become
void upon early redemption:
Not Applicable
53 Talons to be attached to Notes
and, if applicable, the number of
Interest Payment Dates between
the maturity of each Talon
(Bearer Notes):
Not Applicable
54 Business Day Jurisdictions for
Condition 8.8 (jurisdictions
required to be open for
payment):
London Business Day
55 Additional steps that may only be
taken following approval by an
Extraordinary Resolution in
accordance with Condition 13.1
(if applicable):
Not Applicable
56 Details of any other additions or
variations to the Conditions (if
applicable):
Notwithstanding anything to the contrary in the
Conditions of the Notes, the Issuer is not obliged to
make any payment whatsoever in respect of the Notes if,
at the time any such payment would otherwise fall to be
made, the Issuer reasonably believes that any amounts
received by it in respect of the Collateral Notes have
been paid in breach of the Collateral Notes Conditions.
In such circumstance the Issuer may delay such
payment until such time as the Issuer is satisfied that no
claims for repayments of amounts received by it in
respect of the Collateral Notes will be made.
If any amount is paid to a Noteholder in respect of the
Notes when no such amount was due (whether as a
result of miscalculation or otherwise or where such
payment was funded by amounts received by the Issuer
pursuant to the terms of the Collateral Notes where such
amounts were paid in breach of the Collateral Notes
Conditions), such payment made by the Issuer shall be
reimbursed by the relevant Noteholder(s) to the Issuer
and, if no such reimbursement is made, the Issuer may
reduce any subsequent payments owed by it to the
relevant Noteholder(s) by all or part of such un-
19
reimbursed amounts in satisfaction (or partial
satisfaction) thereof and may take such action as it
deems fit to recover any outstanding un-reimbursed
amounts. In respect of any repayment of any such
amount, the amount repaid shall be deposited with the
Custodian on behalf of the Issuer but shall not form part
of the Mortgaged Property for the Notes. Any such
reduction or reimbursement shall, to the extent relevant,
be applied by the Issuer in meeting the claims of the
Custodian or the Issuing and Paying Agent for
repayment of any amount funded or reimbursed by the
Custodian or Issuing and Paying Agent, as the case may
be (or, where such reduction or reimbursement for less
than the full amount of any such claims, in meeting such
claims pro rata). Only after satisfaction of all such claims
shall the amount remaining (if any) be deemed, for
purposes of these Conditions, to have been derived from
the Mortgaged Property for the Notes.
See Schedule
57 The Agents appointed in respect
of the Notes are:
Citibank, N.A., London Branch
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
as the Issuing and Paying Agent, the Calculation Agent
and the Custodian
Citigroup Global Markets Deutschland AG
Reuterweg 16
60323 Frankfurt
Germany
as the Registrar and the Enforcement Agent
Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
as the Disposal Agent
Arthur Cox Listing Services Limited
Earlsfort Centre
Earlsfort Terrace
Dublin 2
Ireland
as the Irish Listing Agent
58 Purchase, Exchange or
Retirement of Notes by the
The Issuer may only purchase, exchange or retire Notes
in accordance with the Special Conditions (as defined in
20
Issuer: the Schedule).
59 Settlement method: Delivery versus payment
Provisions applicable to Global Notes and Certificates
60 How Notes will be represented
on issue:
Global Certificate
61 Applicable TEFRA exemption: Not Applicable
62 Whether Temporary/Permanent
Global Note is exchangeable for
Definitive Notes/Individual
Certificates at the request of the
holder:
Yes, in limited circumstances for Individual Certificates
63 New Global Note: No
64 Intended to be held in a manner
which would allow Eurosystem
eligibility:
No
Provisions relating only to the sale and listing of the Notes
65 Details of any additions or
variations to the Dealer
Agreement:
The following circulation and distribution restrictions
apply:
Switzerland
Each Manager represents, warrants and agrees that (i) it
has not publicly offered, sold or advertised, directly or
indirectly, and will not publicly offer, sell or advertise,
directly or indirectly, the Notes in, into or from
Switzerland, and (ii) the aggregate principal amount of
Notes sold as part of the primary distribution to investors
resident in Switzerland will not exceed 30 per cent. of the
aggregate principal amount of the Notes.
The Issuer has not applied for a listing of the Notes on
the SIX Swiss Exchange or any other regulated trading
facility in Switzerland, and consequently, the information
presented in the Base Prospectus or the Series
Prospectus does not necessarily comply with the
information standards set out in the listing rules of the
SIX Swiss Exchange.
Neither this Series Prospectus nor any other offering and
marketing material relating to the offering, nor the Issuer
nor the Notes has been or will be filed with or approved
by any Swiss regulatory authority. The Notes are not
subject to supervision by any Swiss regulatory authority,
e.g., FINMA, and investors in the Notes will not benefit
from protection or supervision by such authority.
United States
21
The Notes have not been and will not be registered
under the U.S. Securities Act of 1933, as amended (the
“Securities Act”) or with any securities regulatory
authority of any state or other jurisdiction of the United
States. Subject to certain exceptions, the Notes may not
be offered, sold or resold within the United States or to
U.S. persons (as defined in Regulation S under the
Securities Act). The Notes are not being offered in the
United States or to U.S. persons.
66 (a) Listing and admission to
trading:
This Series Prospectus has been approved by the
Central Bank of Ireland (the “Central Bank”), as
competent authority under Directive 2003/71/EC (the
“Prospectus Directive”). The Central Bank approves
this Prospectus as meeting the requirements imposed
under Irish and EU law pursuant to the Prospectus
Directive.
Application has been made to the Irish Stock Exchange
for the Notes to be admitted to the official list and trading
on its regulated market.
(b) Estimate of total expenses
related to admission to trading:
EUR 4,246.20
(c) Date on which the Notes will
be admitted to trading:
16 September 2014
67 Dealer’s Commission: To be deducted from the proceeds of the issue.
68 Method of Issue: Syndicated Issue
69 The following Dealers are
subscribing to the Notes:
Citigroup Global Markets Limited, Crédit Agricole
Corporate and Investment Bank, J.P. Morgan Securities
plc and Morgan Stanley & Co. International plc
70 Rating: The Notes will be rated A+ by Standard & Poor’s Credit
Market Services Europe Limited (“S&P”).
S&P is established in the European Union and registered
under Regulation (EC) 1060/2009 on credit rating
agencies. A rating is not a recommendation to buy, sell
or hold securities and may be subject to revision,
suspension or withdrawal at any time by the assigning
rating agency.
The Security Arrangements
71 Mortgaged Property:
(a) Collateral: EUR 500,000,000 in principal amount of EUR
500,000,000 1.75 per cent. Senior Notes due 2024 (the
“Collateral Notes”) of Zurich Insurance Company Ltd
(the “Collateral Issuer”), which will be registered in the
name of the Issuer and any certificate(s) issued in
respect thereof will be held by the Custodian acting
through its London branch pursuant to the Custody
22
Agreement and the Agency Agreement subject to the
security interests in favour of the Trustee created by the
Trust Deed.
“Agency Agreement” means the agency agreement
dated 25 February 1997 as amended and restated on 16
July 2014 (and as further amended and/or supplemented
from time to time) and as amended and supplemented
for the purposes of the Notes by a supplemental agency
agreement to be dated on or about 16 September 2014
(and as further amended and/or supplemented from time
to time) between, inter alios, the Issuer, the Issuing and
Paying Agent, the Disposal Agent, the Custodian and the
Trustee (the “Supplemental Agency Agreement”).
(b) Security:
(i) Order of priorities: Other Priority, as follows:
In respect of the application of the proceeds of
realisation or enforcement of the security for the Series,
but not the application of the proceeds of realisation or
enforcement of the Managers’ Security, the proceeds
shall be held on trust and applied:
(i) first, in payment or satisfaction of the fees, costs,
charges, expenses and liabilities properly incurred
by the Trustee or any receiver in relation to that
Series in preparing and executing the trusts under
the Principal Trust Deed and the relevant
Supplemental Trust Deed (including any taxes
required to be paid, the costs of realising any such
security and the Trustee’s remuneration);
(ii) secondly, in payment or satisfaction of the fees,
costs, charges, expenses and liabilities properly
incurred by the Enforcement Agent in acting as
enforcement agent of the Issuer in respect of the
Security under the terms of the Principal Trust Deed
and the relevant Supplemental Trust Deed
(including any taxes required to be paid, the costs
of realising or enforcing any such security and the
Enforcement Agent’s remuneration);
(iii) thirdly, in relation to such Series, in meeting the
claims (if any) of the Custodian, the Issuing and
Paying Agent, or any Paying Agent for
reimbursement in respect of any payment of
interest, principal or other redemption amounts
made to the holders of Notes of such Series, as the
case may be, and in payment or satisfaction of the
fees, costs, charges, expenses and liabilities (if any)
properly incurred by the Disposal Agent in acting as
disposal agent of the Issuer in respect of the
23
disposal of the Collateral Notes;
(iv) fourthly, rateably in meeting the claims (if any) of
the holders of Notes of such Series; and
(v) fifthly, in payment of the balance (if any) to the
Issuer.
In respect of the application of the proceeds of
realisation or enforcement of the Managers’ Security, the
proceeds shall be held on trust and applied:
(i) first, in payment or satisfaction of the fees, costs,
charges, expenses and liabilities properly incurred
by the Managers’ Trustee in preparing and
executing the trusts under the Principal Trust Deed
and the relevant Supplemental Trust Deed
(including any taxes required to be paid, the costs
of realising any such security and the Trustee’s
remuneration);
(ii) secondly, in payment or satisfaction of the fees,
costs, charges, expenses and liabilities properly
incurred by the Enforcement Agent in acting as
enforcement agent of the Issuer in respect of the
Managers’ Security under the terms of the Principal
Trust Deed and the relevant Supplemental Trust
Deed (including any taxes required to be paid, the
costs of realising or enforcing any such security and
the Enforcement Agent’s remuneration);
(iii) thirdly, in meeting any Manager’s Claim (as defined
below); and
(iv) fourthly, in payment of the balance (if any) to the
Issuer.
(ii) Details of any other
security or
modifications to any
security
Managers’ Security
Pursuant to the Trust Deed in relation to the Notes, the
Issuer:
(i) will assign by way of security in favour of Citicorp
Trustee Company Limited, in its capacity as
Managers’ Trustee (the “Managers’ Trustee”), to
hold for itself and as trustee for the Managers and
the Enforcement Agent, the Issuer’s rights, title and
interest under the purchase agreement dated 12
September 2014 (and as amended and/or
supplemented from time to time) between the Issuer
and the Collateral Issuer relating to the purchase of
the Collateral Notes by the Issuer (the “Purchase
Agreement”), but excluding the Issuer’s right under
the Purchase Agreement to acquire the Collateral
Notes;
24
(ii) will charge in favour of the Managers’ Trustee, to
hold for itself and as trustee for each Manager and
the Enforcement Agent, by way of first fixed charge
the proceeds of, income from and sums arising from
the enforcement of any claim under the Purchase
Agreement, except for the claim of the Issuer in
relation to its right to acquire the Collateral Notes;
and
(iii) will assign by way of security in favour of the
Managers’ Trustee, to hold for itself and as trustee
for each Manager, the Issuer’s rights, title and
interest under the Trust Deed insofar as the same
relates to the appointment of the Enforcement
Agent as the Issuer’s agent in connection with the
rights and assets of the Issuer referred to in
paragraphs (i) and (ii) above,
(together, the “Managers’ Security”). The Managers’
Security is granted as continuing security in respect of
any claim a Manager may have (a “Manager’s Claim”)
against the Issuer under the Syndication Agreement
arising from any representation, warranty, covenant or
agreement given therein by the Issuer regarding the
Collateral Notes, the Collateral Issuer, the Collateral
Base Prospectus and the Collateral Final Terms
prepared by the Collateral Issuer in respect of the
Collateral Notes.
No Noteholder shall have any interest in the Managers’
Security and the Managers’ Security shall not form part
of the Mortgaged Property. If the Managers’ Security
becomes enforceable, the security for the Notes shall not
consequently become enforceable and the Notes shall
not be affected thereby and shall accordingly remain
outstanding.
Each Manager, in respect of the Managers’ Security, is
subject to limited recourse provisions equivalent to those
set out in Condition 4.8 and Condition 12 in respect of
the Mortgaged Property, in accordance with the
provisions of the Syndication Agreement and the Trust
Deed in relation to the Notes.
Each Manager (when acting in such capacity) is not
permitted to take any action against the Collateral Issuer
or to enforce any claim that the Issuer may have against
the Collateral Issuer under the Collateral Notes or the
Purchase Agreement or otherwise whether before, upon,
or after the Managers’ Security becoming enforceable.
The Managers must rely on similar (but not identical)
rights to those of the Noteholders, including a right of
consultation and agreement with the Issuer (or the
25
Enforcement Agent acting as agent of the Issuer) in
relation to any such action or the enforcement of any
such claim and/or a right to remove the Managers’
Trustee, in each case in accordance with the provisions
of the Trust Deed in relation to the Notes.
The assignment by way of security in favour of the
Trustee of the Issuer’s right under the Purchase
Agreement to acquire the Collateral Notes, and the first
fixed charge in favour of the Trustee of all proceeds
from, income from and sums arising from enforcement of
any claim under the Purchase Agreement but only if
such claim relates to the Issuer’s right to acquire the
Collateral Notes, shall form part of the Mortgaged
Property.
(c) Option Agreement (if
applicable):
Not Applicable
(d) Swap Agreement (if
applicable):
Not Applicable
(e) Details of Credit Support
Document (if applicable):
Not Applicable
(f) Details of Securities
Lending Agreement (if
applicable):
Not Applicable
72 Noteholder Substitution of
Collateral:
Not Applicable
Conflict of interests
Citigroup Global Markets Limited, Citibank, N.A. London Branch and their affiliates will play several
different roles in connection with the Notes including, respectively, as Manager and Calculation
Agent. The existence of such multiple roles and responsibilities for such entities creates possible
conflicts of interest, as further described in “General - Potential conflicts of interest” and “Risk
Factors relating to business relationships and capacity of Citigroup Global Markets Limited (“Citi”)”
above.
26
Schedule –
Additional Amendments to the Base Conditions
1 Condition 4.4 (Disposal Agent)
Citigroup Global Markets Limited in its capacity as Disposal Agent will act as disposal agent in relation to
the disposal of the Collateral Notes (including in connection with any enforcement of the Security (as
defined in the Trust Deed) constituted by the Trust Deed), and may itself make an offer to purchase the
Collateral Notes (subject to the restrictions set forth in Condition 4.6), as specified in the Supplemental
Trust Deed.
In connection with any such disposal by the Disposal Agent, the Issuer or its agent shall give notice to
the Noteholders in accordance with Condition 16 that the Disposal Agent is to begin the process of
disposing of the Collateral Notes in accordance with the terms of the Agency Agreement.
2 Condition 4.6 (Realisation of security)
Condition 4.6 (Realisation of security) shall be amended by:
(i) adding the words “and/or secured” following the words “without first being indemnified” at the end
of the first sentence thereof;
(ii) deleting sub-clause 4.6.3 thereof and replacing it with the following:
“4.6.3 if sums are due to the Enforcement Agent and/or the Custodian and/or the Issuing and
Paying Agent and/or any Paying Agent and/or the Registrar (the claims in respect of
which are Secured Liabilities (as defined in Condition 4.8)) and the Trustee is so directed
in writing by the Enforcement Agent and/or the Custodian and/or the Issuing and Paying
Agent and/or any Paying Agent and/or the Registrar (unless this would in the Trustee’s
opinion be contrary to the interests of the holders of Notes, subject to Clause 6.19 of the
Principal Trust Deed (if applicable)),”; and
(iii) adding the following additional text at the end thereof:
“The Security constituted by the Trust Deed shall, in addition to in the circumstances set out in
Condition 11 (Events of Default), forthwith become enforceable, as provided in the Trust Deed, if
there is any default in the payment of any Redemption Amount on the date such Redemption
Amount is due.
Any realisation and/or enforcement of the Security over the Collateral Notes or exercise of any right
in respect of the Collateral Notes shall be subject to the restrictions set forth in the Collateral Notes
Conditions, including, but not limited to, Condition 10(j) (Restrictions on Transfer of Certain Notes)
and Condition 10(k) (Grants of Security) of the Collateral Notes Conditions.”.
3 Condition 4.9 (Substitution of Mortgaged Property)
Condition 4.9 (Substitution of Mortgaged Property) shall not apply in respect of the Collateral Notes, but
shall apply in respect of the remainder of the Mortgaged Property.
4 Condition 4.11 (Issuer’s rights as holder of Collateral)
Condition 4.11 (Issuer’s rights as holder of Collateral) shall be deleted and replaced with the following:
“4.11 Issuer’s rights as holder of Collateral Notes
The Issuer may exercise any rights in its capacity as holder of the Collateral Notes only with the
consent of the Trustee or as directed by an Extraordinary Resolution of the Noteholders or, where
27
applicable, in accordance with Condition 7.4 (Purchases) or Condition 13.1 (Meetings of
Noteholders) and, if such consent or direction is given, the Issuer will act only in accordance with
such consent or direction. In particular, the Issuer will not attend or vote at any meeting of holders of
the Collateral Notes, or give any consent or notification or make any declaration in relation to the
Collateral Notes, unless the Trustee gives its consent or by direction of an Extraordinary Resolution
of the Noteholders or, where applicable, in accordance with Condition 7.4 (Purchases) or Condition
13.1 (Meetings of Noteholders).”.
5 Condition 6.1 (Interest Rate and Accrual)
Condition 6.1 (Interest Rate and Accrual) shall be deleted and replaced with the following:
6.1 Interest Rate and Accrual
The Notes are Fixed Interest Rate Notes.
Each Note bears interest from (and including) the Interest Commencement Date on the basis of the
relevant Interest Amount calculated in respect of each relevant Interest Payment Date. For each
Interest Payment Date on which a Note is outstanding, the relevant Interest Amount shall be due
and payable in arrear in respect of the Denomination of the relevant Note on such Interest Payment
Date.
Interest will cease to accrue on each Note on the due date for redemption unless payment of
principal is improperly withheld or refused, in which event interest will continue to accrue (both
before and after judgment) on any overdue principal from the due date for redemption to the
Relevant Date at the Collateral Default Interest Rate.
As used herein:
“Collateral Default Interest Rate” means the interest rate applicable to the Collateral Notes in the
event a payment of principal is improperly withheld or refused in accordance with Condition 4(c)
(Accrual of Interest) of the Collateral Note Conditions.
“Collateral Interest Amount” means any interest amount payable in respect of the Collateral
Notes, including but not limited to scheduled Interest Payments (as defined in the Collateral Notes
Conditions), to the extent that the relevant interest amount is actually received by the Issuer and
subject to any adjustment due to tax deduction or withholding and any other or further adjustments
to such amounts as set out in the Collateral Final Terms.
“Collateral Interest Payment Date” means any date on which a Collateral Interest Amount is
payable.
“Collateral Issue Date” means the “Issue Date” of the Collateral Notes (as defined in the Collateral
Notes Conditions).
“Interest Amount” means, in respect of the Denomination of the relevant Note and an Interest
Payment Date, its pro rata share of an amount equal to any Collateral Interest Amount received by
the Issuer in respect of the Interest Calculation Date relating to such Collateral Interest Amount.
“Interest Calculation Date” means in respect of a Collateral Interest Amount, the Collateral Interest
Payment Date relating thereto or, if later, the later of (i) the date on which the Issuer receives
payment of the Collateral Interest Amount relating to such Collateral Interest Payment Date and (ii)
the date on which the Calculation Agent is notified by or on behalf of the Issuer of the Collateral
Interest Amount relating to such Collateral Interest Payment Date and has received any information
required in order to enable the Calculation Agent to determine the related Interest Amount.
“Interest Commencement Date” means the Collateral Issue Date.
28
“Interest Payment Date” means the relevant Interest Calculation Date or, where the Calculation
Agent determines that payment of any related Interest Amount on such date is not possible or
practicable, the Relevant Business Day immediately following such Interest Calculation Date.
6 Condition 6.6 (Calculations)
Condition 6.6 (Calculations) shall be deleted and replaced with the following:
“6.6 Calculations
In respect of each Interest Payment Date, the Calculation Agent shall, subject to the paragraph
below, calculate the Interest Amount due and payable on such Interest Payment Date in respect of
each Note outstanding on such Interest Payment Date.
In order to enable the Calculation Agent to perform its functions under these Conditions, the Issuer
shall provide to the Calculation Agent (or procure the provision of) any information required in order
to enable the Calculation Agent to determine any Interest Amount, Redemption Amount or other
amount payable hereunder. The Calculation Agent shall not be liable for any failure to comply with
its obligations under these Conditions as a result of any failure of the Issuer to provide any such
information.”.
7 Condition 7.3 (Redemption for taxation and other reasons)
7.1 Condition 7.3 (Redemption for taxation and other reasons) shall be interpreted as follows.
If a tax deduction or withholding (collectively, a “Tax Deduction”) is required by law to be made by
the Collateral Issuer in respect of any payment of principal or interest in respect of the Collateral
Notes for any taxes, duties, assessments or governmental charges of whatever nature imposed
by or on behalf of Switzerland, Condition 7.3.2 of the Notes shall not apply to such Tax Deduction
if there is an actual payment by the Collateral Issuer of a corresponding payment of additional
amounts pursuant to Condition 6 (Taxation) or an adjustment to the rate of interest in respect of
the Collateral Notes pursuant to Condition 3.3 (Recalculation of Interest) of the Collateral Notes
Conditions such that the amount received by the Issuer in respect of the Collateral Notes equals
the amount that would have been received by it had no such deduction or withholding been
required.
7.2 Condition 7.3 (Redemption for taxation and other reasons) shall be amended by:
(i) in Condition 7.3.1, deleting the words “, except in the case of any such withholding arising
on account of FATCA,”;
(ii) in Condition 7.3.2, deleting the words “is or will be unable to receive any payment due
under the Swap Agreement in full on the due date therefor without deduction for or on
account of any withholding tax, back-up withholding or other tax, duties or charges of
whatsoever nature imposed on account of FATCA, or (iv)” and the words “except if such
circumstance arises on account of FATCA”;
(iii) in Condition 7.3.3, deleting the words “including, without limitation, any requirement to
provide information or documentation requested by or on behalf of the Issuer in relation to
FATCA or to provide any waiver required by FATCA”, the words “In such circumstances or
if the Issuer is required to withhold on account of FATCA, then the” and the words “Without
prejudice to anything contained in this Condition 7.3, for purposes of Condition 7.3.2, if on
the date falling 90 days prior to the earliest date on which withholding on account of FATCA
could apply to payments under the Swap Agreement or the Collateral, or in respect of sales
proceeds of, the Collateral, the Issuer or the Series (as the case may be) is a
“nonparticipating foreign financial institution” (as such term is used under section 1471 of
29
the Code), the Issuer will be deemed to be unable to receive any payment due in respect of
the Swap Agreement or the Collateral (as applicable) without deduction on account of tax
as described in Condition 7.3.2 and, therefore, the Issuer shall be entitled to redeem the
Notes subject to the terms of this Condition 7.3 and shall do so if so directed by the
Calculation Agent.”.
7.3 In Condition 7.3.2 (iii) the words “is required to comply with any reporting requirement of any such
authority” shall be deleted and replaced with the following:
“is, as a result of a change in, or amendment to, the laws, regulations of the jurisdiction of the
Collateral Issuer or in the official interpretation or application of such laws or regulations, required
to comply with any reporting requirement of any such authority”.
7.4 The following Condition 7.3.4 shall be inserted after Condition 7.3.3:
“If the Issuer, (i) on the occasion of the next payment due in respect of the Notes, (a) would be
required by FATCA to withhold or account for tax or (b) would suffer tax in accordance with
FATCA in respect of its income so that it would be unable to make payment of the full amount
due; or (ii) is or will be unable to receive any payment due in respect of the Collateral forming part
of the Mortgaged Property in full on the due date therefor without deduction for or on account of
any withholding tax, back-up withholding or other tax, duties or charges of whatsoever nature on
account of FATCA,
then the Issuer shall promptly inform the Trustee and the Noteholders of such event and if the
Noteholders within 80 days of such notice direct the Issuer by way of Extraordinary Resolution to
redeem all but not some of the Notes, then the Issuer shall within 30 days of such direction (the
“Early Redemption Date”), redeem all but not some only of the Notes at their outstanding
Redemption Amount. In such circumstances, the Disposal Agent will sell the Collateral Notes
pursuant to the terms of the Agency Agreement in order to fund such redemption.
Notwithstanding the foregoing, if any of the taxes referred to above arises by reason of the failure
of a Noteholder to comply with any applicable procedures including, without limitation, any
requirement to provide information or documentation pursuant to FATCA or to provide any waiver
required by FATCA, then, to the extent it is able to do so, the Issuer, the relevant paying agent, or
any person required to deduct or withhold on a payment to such Noteholder, shall deduct such
taxes from the amounts payable to such Noteholder and all other Noteholders shall receive the
due amounts payable to them. In such circumstances, the Noteholders shall not be entitled to
direct the Issuer by way of Extraordinary Resolution to redeem the Notes as aforesaid. Any such
deduction shall not be an Event of Default under Condition 11.
For the purpose of Condition 7.3, reference to “outstanding Redemption Amount” means, in
respect of each Note, such Note’s pro rata share of the net realised sale proceeds of the
Collateral Notes following their sale by the Disposal Agent pursuant to the relevant terms
governing the sale of the Collateral Notes in the Agency Agreement and after any withholding or
deduction that may be required by FATCA, or otherwise, in connection with the sale of the
Collateral Notes or the distribution of the outstanding Redemption Amount to Noteholders.”.
30
8 Condition 7.4 (Purchases)
Condition 7.4 (Purchases) shall be deleted and replaced with the following:
“7.4 Purchases
The Issuer may only purchase, exchange or retire Notes in accordance with the special conditions
below (the “Special Conditions”):
(i) If at any time the Collateral Issuer makes an offer to the Issuer, or to the Custodian on behalf
of the Issuer, to purchase the Collateral Notes for cash consideration or to receive the Notes
for cancellation (a “Collateral Tender Offer”) or for non-cash assets (a “Collateral Exchange
Offer”), then the Issuer shall only accept such Collateral Tender Offer or Collateral Exchange
Offer (notwithstanding anything to the contrary in Condition 13.1 (Meetings of Noteholders)),
and the Trustee shall only be permitted to release the Security created over the Collateral
Notes pursuant to the Trust Deed, in accordance with paragraphs (ii) to (v) below.
(ii) Subject to paragraphs (iii) to (v) below, upon the occurrence of:
(a) a Collateral Tender Offer, the Issuer shall make an offer to purchase the Notes for cash
consideration or to receive the Notes for cancellation (a “Cloverie Tender Offer”); or
(b) an Collateral Exchange Offer, the Issuer shall exchange the Notes for non-cash assets (a
“Cloverie Exchange Offer”),
provided in each case that (other than in the case of the Issuer receiving Notes for
cancellation) in the reasonable opinion of the Issuer, the Issuer would not be materially
disadvantaged by such Cloverie Tender Offer or Cloverie Exchange Offer, as the case may be.
(iii) Any Cloverie Tender Offer or Cloverie Exchange Offer may only be made on a limited recourse
basis and upon terms that will ensure that after any such purchase, cancellation or exchange
of Notes, the aggregate principal amount of Notes outstanding will be the same as the
aggregate principal amount of Collateral Notes outstanding. The Issuer shall not make a
Cloverie Tender Offer or a Cloverie Exchange Offer (A) other than in the case of the Issuer
receiving Notes for cancellation, without first having entered into an agency agreement with an
agent to act as tender agent or, as the case may be, exchange agent for the Issuer in
connection with the Cloverie Tender Offer or the Cloverie Exchange Offer and (B) without first
being satisfied that its costs and expenses in connection with the same will be met, and subject
to Standard & Poor's (or any other applicable rating agency), being notified of the same.
Furthermore, any Cloverie Tender Offer or Cloverie Exchange Offer shall be subject to any
terms and conditions required by the Trustee and shall, for as long as the Notes are listed on
the Official List of the Irish Stock Exchange and admitted to trading on the regulated market of
the Irish Stock Exchange, be in accordance with all applicable rules and regulations of the Irish
Stock Exchange. The Issuer shall forthwith notify Standard & Poor’s (or any other applicable
rating agency), if any Notes are purchased or exchanged pursuant to this Condition 7.4.
(iv) For the purposes of any Cloverie Tender Offer or Cloverie Exchange Offer, whether or not
relating to any Collateral Tender Offer or Collateral Exchange Offer, the Trustee shall not
release the Security created over the Collateral Notes pursuant to the Trust Deed except that it
may release the Collateral Notes to the extent that after such release and taking into account
any purchase, exchange or cancellation of Notes pursuant to any Cloverie Tender Offer or
Cloverie Exchange Offer, the aggregate principal amount of the Collateral Notes outstanding
will be the same as the aggregate principal amount of Notes outstanding. To the extent that
such Cloverie Tender Offer or Cloverie Exchange Offer relates to any Collateral Tender Offer
or, as the case may be, Collateral Exchange Offer, following the release of such Security the
31
Issuer shall accept (or procure the acceptance of) such Collateral Tender Offer or Collateral
Exchange Offer in respect of the Collateral Notes so released.
Any failure by the Issuer to make a payment or delivery due in connection with any Cloverie Tender
Offer or Cloverie Exchange Offer shall constitute a default in payment in respect of the Notes for the
purposes of Condition 11.1.”.
9 Condition 7.10 (Cancellation)
The provisions of Condition 7.10 (Cancellation) shall apply to the exchange or retirement of Notes as well
as to the purchase of Notes in accordance with Condition 7.4 (Purchases).
10 Condition 8.5 (Appointment of Agents)
Condition 8.5 (Appointment of Agents) shall be deleted and replaced with the following:
“8.5 Appointment of Agents
The Issuing and Paying Agent, the Calculation Agent, the Custodian, the Disposal Agent, the
Enforcement Agent and the Registrar initially appointed by the Issuer and their respective specified
offices are:
Issuing and Paying Agent,
Custodian and Calculation
Agent
Citibank, N.A., London Branch
Citigroup Centre
Canada Square
London E14 5LB
United Kingdom
Enforcement Agent and
Registrar
Citigroup Global Markets
Deutschland AG
Reuterweg 16
60323 Frankfurt
Germany
Disposal Agent
Citigroup Global Markets
Limited
Citigroup Centre
Canada Square
London E14 5LB
United Kingdom
The Issuing and Paying Agent, the Calculation Agent, the Custodian, the Disposal Agent, the
Enforcement Agent and the Registrar act solely for the Issuer (or, as the case may be, and other
than in the case of the Disposal Agent or the Enforcement Agent, the Trustee) and do not assume
any obligation or relationship of agency or trust for or with any holder.
The Issuing and Paying Agent and the Custodian are subject to the minimum rating requirements
set forth in the Agency Agreement and the Custody Agreement, respectively.
The lssuer reserves the right at any time with the prior written approval of the Trustee to vary or
terminate the appointment of the Issuing and Paying Agent, any Paying Agent, the Custodian, the
Disposal Agent, the Enforcement Agent or the Registrar and to appoint additional or other Paying
Agents, provided that the lssuer will at all times maintain (i) an Issuing and Paying Agent, (ii) a
Paying Agent having its specified office in a major European city, (iii) a Calculation Agent where the
Conditions so require, (iv) a Disposal Agent where the Conditions so require, (v) an Enforcement
Agent where the Conditions so require (except where the Trust Deed permits the Enforcement
Agent to resign without a replacement having been appointed), (vi) a Paying Agent with a specified
office in a European Union member state that will not be obliged to withhold or deduct tax pursuant
to any law implementing European Council Directive 2003/48/EC or any other Directive on the
taxation of savings implementing the conclusions of the ECOFIN Council meeting of 26-27
November 2000 (vii) a Custodian and (viii) a Registrar. For so long as the Notes are listed on a
stock exchange, the lssuer will maintain such agents as may be required by the rules of such stock
exchange.”.
32
11 Condition 12 (Enforcement)
Condition 12 (Enforcement) shall be deleted and replaced with the following:
“12 Enforcement
At any time after the Notes become due and repayable, the Trustee may, at its discretion and
without further notice, institute such proceedings against the Issuer as it may think fit to enforce the
terms of the Trust Deed and the Notes (other than insofar as they relate to the Security constituted
by the Trust Deed), but it need not take any such proceedings or any step or action unless (a) it
shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in
writing by Noteholders holding at least one-fifth in principal amount of the Notes outstanding, and
(b) it shall have been indemnified and/or secured to its satisfaction.
Only the Trustee, or the Enforcement Agent acting as agent of the Issuer in accordance with
Clause 6.3 of the Supplemental Trust Deed, may pursue the remedies available under the Trust
Deed to enforce the rights of the Secured Parties or the other parties thereto. If the Trustee, having
become bound to do so, but only to the extent that the Trustee is permitted to take such action
pursuant to Clause 6.1 of the Supplemental Trust Deed, fails or neglects to do so, then the
Noteholders may exercise their rights under Clause 16.2 (Retirement and Removal) of the Principal
Trust Deed to remove the Trustee, but shall in no circumstances be entitled to proceed directly
against the Issuer.
If the Enforcement Agent, having become bound to proceed in accordance with the terms of the
Trust Deed, fails or neglects to do so, then the Noteholders may exercise their rights under Clause
6.5 (Provisions relating to the Enforcement Agent) of the Supplemental Trust Deed to remove the
Enforcement Agent, but shall in no circumstances be entitled to proceed directly against the Issuer.
The Trustee and the other Secured Parties shall have recourse only to the Mortgaged Property (or
part thereof if so provided in these Conditions) in respect of such Series (and, in the case of the
Manager’s Secured Parties, to the Manager’s Charged Assets (each as defined in the Supplemental
Trust Deed) or part thereof if so provided in these Conditions) and subject always to the charges
and other security interests created by the Principal Trust Deed, the relevant Supplemental Trust
Deed and/or any Other Security Document. If, following realisation of the Mortgaged Property by the
Trustee and/or the Enforcement Agent and distribution of the net proceeds, such net proceeds are
insufficient for the Issuer to make all payments which, but for the effect of this Condition 12 and
similar limited recourse provisions, would then be due out of such net proceeds, such obligations of
the Issuer will be limited to such net proceeds, and the other assets of the Issuer will not be
available for payment of any shortfall arising therefrom. None of the Trustee, the other Secured
Parties, the Managers’ Trustee, the other Manager’s Secured Parties or any person acting on behalf
of any of them shall be entitled to take any further steps against the Issuer to recover any further
sum, any outstanding claim or debt in respect of such further sum shall be extinguished and no debt
shall be owed by the Issuer to any such person in respect of any such further sum. In particular,
none of the Trustee, Managers’ Trustee, any other Secured Party or Manager’s Secured Party or
any other party to the Trust Deed or any person acting on behalf of any of them shall be entitled to,
at any time, petition or take any other step for the insolvency, examinership, winding-up or
liquidation of the Issuer, and none of them shall have any claim in respect of any sum arising in
respect of the extinguished claim or debt in respect of the Mortgaged Property for any other Series
or any other assets secured for the benefit of any other obligation of the Issuer, provided that any of
the Trustee, any Secured Parties or Manager’s Secured Party or other party or any person acting
on behalf of any of them may prove or lodge a claim in the insolvency, examinership, winding-up or
liquidation of the Issuer initiated by another party and provided further that any of the Trustee, any
Secured Party or Manager’s Secured Party or any person acting on behalf of them may take
33
proceedings to obtain a declaration or similar judgment or order as to the obligations and liabilities
of the Issuer.”.
12 Condition 13.1 (Meetings of Noteholders)
Condition 13.1 (Meetings of Noteholders) shall be amended by adding the following three paragraphs at
the end thereof:
“In addition, the Issuer shall, if so directed in writing by the holders of at least one-fifth in principal amount
of the Notes then outstanding, or if so directed by an Extraordinary Resolution of the Noteholders (in
each case, a “Noteholder Direction”) (subject in each case to its being indemnified to its satisfaction),
exercise any rights in its capacity as holder of the Collateral Notes (including to direct the trustee in
respect of the Collateral Notes to enforce the terms of the Collateral Notes as contemplated thereby) or
its right under the Purchase Agreement to acquire the Collateral Notes in accordance with such direction
(as more specifically set out in the Trust Deed).
At any time after the security for the Notes has become enforceable, the Enforcement Agent shall, if the
Issuer is directed to do so by any Noteholder Direction (subject in each case to the Enforcement Agent
being indemnified and/or secured to its satisfaction), exercise on behalf of the Issuer as the Issuer’s
agent any rights of the Issuer in the Issuer’s capacity as holder of the Collateral Notes (including to direct
the trustee in respect of the Collateral Notes to enforce the terms of the Collateral Notes as contemplated
thereby) or the Issuer's right under the Purchase Agreement to acquire the Collateral Notes and the
Enforcement Agent will act only in accordance with any Noteholder Direction (as more specifically set out
in the Trust Deed).
Without prejudice to the foregoing, in no circumstances shall the Trustee be permitted when acting in its
capacity as trustee for the Noteholders and the other Secured Parties, nor shall the Noteholders and the
other Secured Parties (when acting in their respective capacities) be permitted, to take any action
against the Collateral Issuer or enforce any claim that the Issuer may have against the Collateral Issuer
under the Collateral Notes or the Purchase Agreement or otherwise whether before, upon, or after any
security created by or pursuant to the Trust Deed becoming enforceable.”.
13 Condition 17 (Indemnification and Obligations of the Trustee)
The third paragraph of Condition 17 (Indemnification and Obligations of the Trustee) shall be deleted and
replaced with the following:
“The Trust Deed provides that in acting as Trustee under the Trust Deed the Trustee shall not assume
any duty or responsibility to any other Secured Party (other than to pay any such Secured Party any
moneys received and repayable to it held on trust for it and to act in accordance with the provisions of
Conditions 4 and 13.1 and Clauses 6.6, 6.19, 16.1, 16.2 and 20.1 of the Principal Trust Deed) and shall
have regard solely to the interests of the Noteholders of any Series, or as the case may be, all Series
and shall not (subject to the provisions of Conditions 4 and 13.1 and Clauses 6.6, 6.19, 16.1, 16.2 and
20.1 of the Principal Trust Deed, to the extent applicable, which require the Trustee to act on the
direction of the Custodian, the Issuing and Paying Agent, the Registrar, any Paying Agent, any Transfer
Agent or the Enforcement Agent in certain circumstances or divide the Mortgaged Property) be obliged to
act on any directions of any other person if this would in the Trustee’s opinion be contrary to the interests
of the Noteholders.”.
A18079943/9.0a 34
Collateral Notes Summary
On the Issue Date the Issuer will acquire EUR 500,000,000 in principal amount of EUR 500,000,000 1.75
per cent. Senior Notes due 2024 (the “Collateral Notes”) of Zurich Insurance Company Ltd (the
“Collateral Issuer”), which will be registered in the name of the Issuer and any certificate(s) issued in
respect thereof will be held by the Custodian acting through its London office pursuant to the Custody
Agreement and the Agency Agreement subject to the security interests in favour of the Trustee created
by the Trust Deed.
The following summary of the Collateral Notes is qualified by reference to the Collateral Notes
Conditions.
Title: EUR 500,000,000 1.75 per cent. Senior Notes due 2024
Collateral Issuer: Zurich Insurance Company Ltd
Registered Address of the Collateral Issuer: Mythenquai 2, CH-8002 Zurich, Switzerland (telephone:
+41 44 625 25 25)
Country of Incorporation Switzerland; registration number CH-020.3.929.583-0
and company number CHE-105.833.114
Nature of Business: The purpose of Zurich Insurance Company Ltd is to
conduct all kinds of insurance and reinsurance
operations, except for direct life insurance business.
Zurich Insurance Company Ltd has a dual function, firstly
as an insurer, operating through subsidiaries, branch
offices and representations in Switzerland and other
countries, and secondly as a holding company. Zurich
Insurance Company Ltd and its subsidiaries (collectively
the “Zurich Insurance Company Group”) are a provider
of insurance-based products. The Zurich Insurance
Company Group also distributes non-insurance products,
such as mutual funds, mortgages and other financial
services products, from selected third-party providers. It
operates mainly in Europe, the USA, Latin America and
Asia-Pacific through subsidiaries, branch offices and
representations.
Principal Amount: EUR 500,000,000
Denomination(s): EUR 100,000 and integral multiples of EUR 1,000 above
such amount
Collateral Issue Date: 16 September 2014
Maturity Date: 16 September 2024
Interest Rate: 1.75 per cent. per annum., calculated using an
Actual/Actual (ICMA) day count fraction
Interest Payment Dates: 16 September in each year from and including 16
September 2015
Form: Individual Registered Notes
35
Ranking: Unsubordinated
Taxation: As described in the Collateral Notes Conditions
Listing: None
Governing law: English law
ISIN: None
Rating: The Collateral Notes will be rated by Moody’s Investor
Service Ltd and S&P
The Collateral Issuer is owned by Zurich Insurance Group Ltd, the ultimate parent company of the Zurich
Insurance Group. Zurich Insurance Group Ltd is a public limited liability company (Aktiengesellschaft)
under Swiss Law. It is incorporated in Zurich, Switzerland, its registered office is at Mythenquai 2, CH-
8002 Zurich, Switzerland and its equity securities are listed on the SIX Swiss Exchange (SIX: ZURN) and
are included in the blue chip index, the Swiss Market Index (SMI)®. The Collateral Issuer has debt
securities admitted to trading on the SIX Swiss Exchange.
Purchase of the Collateral Notes
The Issuer and the Collateral Issuer have entered into the Purchase Agreement pursuant to which the
Issuer has agreed to purchase the Collateral Notes from the Collateral Issuer. Under the Purchase
Agreement, the Collateral Issuer has given certain representations and warranties to the Issuer and
agreed to indemnify the Issuer against certain liabilities.
The Collateral Issuer has acknowledged the assignments by way of security of the Issuer’s rights under
the Purchase Agreement to the Trustee. For a description of these assignments see “The Security
Arrangements – Details of any other security or modifications to any security” under “Terms and
Conditions of the Notes”, and “Security Arrangements in respect of the Notes” below.
Security Arrangements in respect of the Notes
Subject as set out below, the obligations of the Issuer under the Notes are secured, inter alia, by a first
fixed charge over the Collateral Notes. The Collateral Notes will be registered in the name of the Issuer
and any certificate(s) issued in respect thereof will be held by the Custodian acting through its London
office pursuant to the Custody Agreement and the Agency Agreement subject to the security interests in
favour of the Trustee created by the Trust Deed.
Subject as set out below, the obligations of the Issuer under the Notes are secured pursuant to the Trust
Deed by, inter alia, (i) a first fixed charge in favour of the Trustee over the Collateral Notes, which are
registered in the name of the Issuer and all assets and property belonging to the Issuer and deriving from
the Collateral Notes; (ii) an assignment by way of security in favour of the Trustee of the Issuer’s rights,
title and interest attaching to or relating to the Collateral Notes and all sums derived therefrom, including,
without limitation, any right to delivery thereof or to an equivalent number or nominal value thereof which
arises in connection with any such assets being held in a clearing system or through a financial
intermediary; (iii) an assignment by way of security in favour of the Trustee of the Issuer’s right under the
Purchase Agreement to acquire the Collateral Notes; (iv) a first fixed charge in favour of the Trustee over
all proceeds of, income from and sums arising from enforcement of any claim under the Purchase
Agreement but only if such claim relates to the Issuer’s right to acquire the Collateral Notes; (v) an
assignment by way of security in favour of the Trustee of the Issuer’s rights, title and interest against the
Custodian and the Disposal Agent, to the extent that they relate to the Collateral Notes; (vi) an
36
assignment by way of security in favour of the Trustee of the Issuer’s rights, title and interest under the
Trust Deed insofar as the same relates to the appointment of the Enforcement Agent as the Issuer’s
agent in connection with the rights and assets of the Issuer referred to in paragraphs (i) to (v) above; (vii)
an assignment by way of security in favour of the Trustee of the Issuer’s rights, title and interest under
the Agency Agreement, to the extent that they relate to the Notes; (viii) an assignment by way of security
in favour of the Trustee of the Issuer’s rights, title and interest under the Custody Agreement, to the
extent that they relate to the Notes; (ix) an assignment by way of security in favour of the Trustee of the
Issuer’s rights, title and interest to all sums held in the Cash Account (as defined in the Custody
Agreement); and (x) a first fixed charge in favour of the Trustee over (a) all sums held by the Custodian
and/or the Issuing and Paying Agent and/or any Paying Agent to meet payments due in respect of the
obligations and duties of the Issuer under the Trust Deed, the Notes, the Agency Agreement and/or the
Custody Agreement and (b) all sums held by the Custodian in the Cash Account and all other sums held
by the Custodian or any sums held by the Issuing and Paying Agent and/or any Paying Agent to meet
payments due in respect of the obligations and duties of the Issuer under the Trust Deed, the Notes, the
Agency Agreement and/or the Custody Agreement (the Collateral Notes, together with the rights and
assets of the Issuer referred to in this paragraph, being the “Mortgaged Property”).
A charge, although expressed in words which would suffice to create a fixed charge, may be treated as a
floating charge, particularly if it appears that it was intended that the chargor should have licence to
dispose of the assets charged in the course of its business without the consent of the chargee.
Following any realisation or enforcement of the security over the Mortgaged Property, there can
be no assurance that the proceeds of such realisation or enforcement will be sufficient to repay
the principal amount due under the Notes and any other amount due in respect of the Notes.
Associated Risks and Other Information concerning the Collateral Notes
Investors should note that the performance of the Notes is linked to the performance of the Collateral
Notes. Any event that causes the Collateral Issuer not to make all or part of any scheduled payments on
the Collateral Notes or to delay any such payments will result in corresponding reductions and delays in
respect of principal and interest payable in respect of the Notes. The Notes may also redeem earlier than
anticipated due to tax imposition and other events affecting the Collateral Notes. Any of these events
may cause significant losses to Noteholders and may result in the Notes paying no interest and/or
redeeming at zero.
The Noteholders will have no right to physical delivery of the Collateral Notes under the terms of
the Notes. Any enforcement of security over the Collateral Notes is subject to the transfer
restrictions set forth in the Collateral Notes Conditions. These transfer restrictions severely limit
the potential transferees of the Collateral Notes.
A summary of the provisions of the Collateral Notes is set forth above, and the detailed terms and
conditions governing the Collateral Notes are set forth in Appendix A and Appendix B to this Series
Prospectus.
The Noteholders may obtain details of the past and future performance and volatility of the Collateral
Notes from the Issuing and Paying Agent.
Disposal of the Collateral Notes
The following is a summary of the provisions pursuant to which the Disposal Agent will effect a sale of
the Collateral Notes if required to do so pursuant to the Conditions.
If the Issuer becomes obliged under the Conditions to sell the Collateral Notes in order for it to make a
payment under the Conditions, or if the Security (including in respect of the Collateral Notes) constituted
37
by the Trust Deed becomes enforceable (such Collateral Notes in either case being the “Affected
Collateral”), the Disposal Agent, as the Issuer’s agent, shall determine on the relevant Disposal Cut-Off
Date in a commercially reasonable manner, the current market value of the Affected Collateral. Where
the Disposal Agent determines that it is commercially reasonable to do so, it shall on the Disposal
Commencement Date use reasonable endeavours to seek from five Qualifying Banks firm bid quotes for
the purchase of the Affected Collateral for settlement no later than the Affected Collateral Settlement
Date (each a “Bid Quotation”). Upon receipt of at least two Bid Quotations on a Disposal Business Day,
the Disposal Agent shall select the highest Bid Quotation received and shall sell the Affected Collateral
on behalf of the Issuer at the selected Bid Quotation. If the Disposal Agent is unable to obtain at least
two Bid Quotations on a Disposal Business Day on or prior to the Disposal Cut-Off Date then the
Disposal Agent shall, if a single Bid Quotation is available on the Disposal Cut-Off Date, select such
single Bid Quotation and shall sell the Affected Collateral on behalf of the Issuer at such Bid Quotation. If
no Bid Quotations are received by the Disposal Agent on the Disposal Cut-Off Date, the Disposal Agent
shall (provided that Citibank, N.A. is a Qualifying Bank) purchase such principal amount of the Affected
Collateral from the Issuer on the Affected Collateral Settlement Date at such value determined by
Citibank, N.A., acting in a reasonable commercial manner, to be the current market value of the Affected
Collateral. For the avoidance of doubt, Citibank, N.A. may deem the current market value of the Affected
Collateral to be zero.
The parties agree that any quotation selected in accordance with the procedures above shall constitute
the best price reasonably obtainable in the circumstances for the Affected Collateral.
The Disposal Agent and Citibank, N.A. shall be subject to the transfer restrictions applicable to the
Collateral Notes in relation to any disposal of the Collateral Notes, including but not limited to the
restrictions set out in Condition 10(j) (Restrictions on Transfer of Certain Notes) and Condition 10(k)
(Grants of Security) of the Collateral Notes Conditions. The Disposal Agent shall not, and shall not be
required to, dispose of the Collateral Notes where such disposal would violate any such transfer
restrictions, and Citibank, N.A. shall not, and shall not be required to, purchase the Collateral Notes
where such purchase would violate any such transfer restrictions.
For the purpose of the above:
“Affected Collateral Settlement Date” means the date occurring one Business Day prior to the
Settlement Date.
“Business Day” means a day (other than a Saturday or a Sunday) on which commercial banks are
generally open for business in London and on which the TARGET System is operating.
“Disposal Business Day” means any Business Day selected by the Disposal Agent in its sole and
absolute discretion from and including the Disposal Commencement Date to and including the Disposal
Cut-Off Date. If the Disposal Agent is unable to obtain two or more Bid Quotations on such Disposal
Business Day, it may designate any subsequent Business Day falling on or prior to the Disposal Cut-Off
Date as a Disposal Business Day.
“Disposal Commencement Date” means:
(i) other than in connection with any enforcement of Security, the date occurring five Business Days (or
such shorter period as may be required by the Conditions) prior to the Settlement Date, unless on
such date the amount of the payment required to be made on the Settlement Date has not been
determined, in which case the “Disposal Commencement Date” shall be the date on which the
amount of such payment is determined or if such date is not a Business Day, the next following
Business Day; or
(ii) in connection with any enforcement of Security, the date falling 30 calendar days following the date
on which Noteholders are notified in accordance with the terms and conditions of the Notes that the
38
Disposal Agent is to begin the process of disposing of the Collateral Notes in accordance with the
terms of the Agency Agreement or, if such 30th calendar day is not a Business Day, the
immediately following Business Day.
“Disposal Cut-Off Date” means the date occurring two Business Days prior to the Settlement Date.
“Qualifying Bank” means a person or entity which effectively conducts banking activities with its own
infrastructure and staff as its principal business purpose and which has a banking licence in full force and
effect issued in accordance with the banking laws in force in its jurisdiction of incorporation, or if acting
through a branch, issued in accordance with the banking laws in the jurisdiction of such branch.
“Settlement Date” means:
(i) other than in connection with any enforcement of Security, the date on which the Issuer is required
to make a payment under the terms and conditions of the Notes; and
(ii) in connection with any enforcement of Security, the date occurring 30 calendar days following the
Disposal Commencement Date or, if such 30th calendar day is not a Business Day, the immediately
following Business Day.
“TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express
Transfer (known as TARGET2) System or any successor thereto.
39
General Information
1. The Issuer is a public limited company, incorporated in and organised under the laws of Ireland,
with its registered office at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2, and registered
as Cloverie Public Limited Company under no. 374618. The Issuer has a share capital in the total
amount of EUR 40,000, divided into 40,000 ordinary shares with a par value of EUR 1 each. The
Issuer does not have any preference shares or profit sharing certificates outstanding and the Issuer
does not dispose of authorised or conditional share capital. The Issuer did not pay any dividends
during the last five years.
2. From the date of this Series Prospectus and for so long as the Notes remain outstanding, the
following documents will be available for inspection in physical format during usual business hours
on any weekday (Saturdays, Sundays and public holidays excepted) at the office of the Issuing and
Paying Agent and at the office of the Issuer. Copies of the documents referred to below may be
obtained free of charge from the specified office of the Issuing and Paying Agent:
(a) this Series Prospectus (including the Collateral Base Prospectus and the Collateral Final
Terms); and
(b) the Supplemental Trust Deed and the Supplemental Agency Agreement in relation to the
Notes;
(c) audited financial statements of the Issuer for the financial year ended 31 December 2011 and
31 December 2012 and any subsequent financial years for which audited financial statements
of the Issuer are available.
3. The issue of the Notes was authorised by a resolution of the Board of Directors of the Issuer passed
on or around 11 September 2014.
4. The Issuer does not intend to provide any post issuance transactional information on either the
Notes (as described in the Conditions above) or the Collateral Notes.
5. There has been no material adverse change in the financial position or prospects of the Issuer since
31 December 2012 (such date being the date of the Issuer’s last audited financial statements) which
is material or significant.
6. The Issuer has not been involved in any litigation, arbitration or governmental proceedings
(including such proceedings which are pending or threatened or of which the Issuer is aware during
the 12 months preceding the date of the Series Prospectus) which may have or have had in the
recent past, significant effects on the financial position or profitability of the Issuer.
7. So far as the Issuer is aware:
(a) since 31 December 2013 there has been no material adverse change in the prospects of the
Collateral Issuer;
(b) since 31 December 2013 there has been no significant change in the financial or trading
position of the Collateral Issuer; and
(c) save as disclosed in the Collateral Base Prospectus on pages 107-108, there are no
governmental, legal or arbitration proceedings (or any such proceedings which are pending or
threatened of which the Collateral Issuer is aware) during the 12 months before the date of
publication of the Collateral Base Prospectus which may have or have had in the recent past,
significant effects on the financial position or profitability of any of the Issuers or on the ZIC
Group.
40
8. Arthur Cox Listing Services Limited has been appointed by the Issuer to act as its listing agent and
as such is not seeking admission to listing of the Notes on the regulated market of the Irish Stock
Exchange for the purposes of the Prospectus Directive on its own behalf, but as an agent on behalf
of the Issuer.
9. No web addresses mentioned herein form part of this Series Prospectus for the purposes of
application for listing of the Notes and approval of this Series Prospectus.
41
Appendix A –
Final Terms of the Collateral Notes
The following Final Terms of the Collateral Notes do not constitute final terms for the purposes of the
Prospectus Directive.
[This page is left intentionally blank.]
LON29916433/11
Final Terms dated 12 September 2014
Zurich Insurance Company Ltd
Issue of €500,000,000 1.75 per cent. Senior Notes due 2024
under the USD18,000,000,000
Euro Medium Term Note Programme
Part A – Contractual Terms
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Amended and
Restated Trust Deed dated 19 May 2014 (the “Trust Deed”). This document constitutes the Final Terms of the Notes
described herein and must be read in conjunction with the Trust Deed.
1. Issuer: Zurich Insurance Company Ltd
2. (i) Series Number: 36
(ii) Tranche Number: 1
3. Specified Currency or Currencies: Euro (“€”)
4. Aggregate Nominal Amount of Notes admitted to trading:
(i) Series: €500,000,000
(ii) Tranche: €500,000,000
5. Issue Price: 99.347 per cent. of the Aggregate Nominal Amount
6. (i) Specified Denominations: €100,000 and integral multiples of €1,000 in excess
thereof up to and including €199,000
(ii) Calculation Amount: €1,000
7. (i) Issue Date: 16 September 2014
(ii) Interest Commencement Date: Issue Date
8. Maturity Date (for dated Notes only): 16 September 2024
9. Interest Basis: 1.75 per cent. Fixed Rate
10. Redemption / Payment Basis: Redemption at par
11. Change of Interest or Redemption / Payment Basis: Not Applicable
12. Put / Call Options: Not Applicable
13. (i) Status of the Notes: Unsubordinated
(ii) Date Board approval for issuance of Notes obtained: 12 February 2014
14. Condition 7(b)(ix) to apply: Yes
15. Initial Permitted Non-Qualifying Lender: Cloverie Public Limited Company
Provisions Relating to Interest (if any) Payable
16. Fixed Rate Note Provisions: Applicable
(i) Rate of Interest: 1.75 per cent. per annum payable annually in arrear
(ii) Interest Payment Date(s): 16 September in each year commencing 16 September
2015
LON29916433/11
2
(iii) Fixed Coupon Amount(s): €17.50 per Calculation Amount
(iv) Broken Amount(s): Not Applicable
(v) Fixed Day Count Fraction: Actual/Actual (ICMA)
(vi) Determination Dates: 16 September in each year
17. Floating Rate Note Provisions: Not Applicable
18. Zero Coupon Note Provisions: Not Applicable
Provisions Relating to Redemption
19. Call Option: Not Applicable
20. Put Option: Not Applicable
21. Final Redemption Amount of each Note: €1,000 per Calculation Amount
22. Early Redemption Amount:
Early Redemption Amount(s) payable on redemption for
taxation reasons or on event of default:
€1,000 per Calculation Amount
23. Maturity Date of Dated Subordinated Notes extended upon
a Solvency Event in accordance with Condition 6(a):
Not Applicable
General Provisions Applicable to the Notes
24. Form of Notes: Individual Registered Notes
25. New Global Note Form: No
26. Payment Business Centre(s): London
27. Talons for future Coupons or Receipts to be attached to
Definitive Notes (and dates on which such Talons mature):
No
28. Consolidation provisions: Not Applicable
29. Relevant Jurisdictions: See Condition 6(c)
30. Restricted Note (Condition 10(j) shall apply): Yes
(i) Restricted Note Minimum Denomination Amount: €100,000
(ii) Restricted Note Transfer Amount: €100,000
(iii) Number of Permitted Non-Qualifying Lenders: One
Responsibility
The Issuer accepts responsibility for the information contained in these Final Terms.
Signed on behalf of the Issuer:
By: ............................... By: …………………………
Duly authorised Duly authorised
LON29916433/11
3
Part B – Other information
1. Listing and Admission to Trading
(i) Listing: None
(ii) Admission to trading: Not Applicable
(iii) Estimate of total expenses related to admission to trading: Not Applicable
2. Ratings:
Ratings: The Notes to be issued are expected to be rated:
S & P: A+
Moody’s: A1
3. Operational Information
(i) ISIN Code: Not Applicable
(ii) Common Code: Not Applicable
(iii) Any clearing system(s) other than Euroclear Bank
S.A./N.V. and Clearstream Banking société anonyme and
the relevant identification number(s):
Not Applicable – the Notes are not being held in a
Clearing System
(iv) Delivery: Delivery free of payment
Names and addresses of initial Paying Agent(s): Not Applicable
Names and addresses of additional Paying Agent(s) (if
any):
Not Applicable
(v) Name and address of Common Safekeeper (if applicable): Not Applicable
(vi) Intended to be held in a manner which would allow
Eurosystem eligibility:
No
Distribution
4. (i) If syndicated, names of Managers: Not Applicable
(ii) Stabilising Manager(s) (if any): Not Applicable
5. If non-syndicated, name of Dealer: Not Applicable
6. U.S. Selling Restrictions: Not Applicable
7. Additional selling restrictions: Not Applicable
42
Appendix B –
Collateral Base Prospectus
BASE PROSPECTUS 19 May 2014
Zurich Finance (Luxembourg) S.A. (incorporated with limited liability in the Grand Duchy of Luxembourg)
Zurich Finance (UK) plc (incorporated with limited liability in England and Wales) Zurich Insurance Company Ltd (incorporated with limited liability in Switzerland)
irrevocably guaranteed, in the case of Notes issued by Zurich Finance (Luxembourg) S.A. and Zurich Finance (UK) plc by
Zurich Insurance Company Ltd USD 18,000,000,000 Euro Medium Term Note Programme
Under this USD18,000,000,000 Euro Medium Term Note Programme (the “Programme”), Zurich Finance (Luxembourg) S.A. (“ZF (Luxembourg)”), Zurich Finance (UK) plc (“ZF (UK)”) and Zurich Insurance Company Ltd (“ZIC”, and together with ZF (Luxembourg) and ZF (UK) the “Issuers” and each, an “Issuer”) may from time to time issue notes (the “Notes”) denominated in any currency agreed between the relevant Issuer and the relevant Dealer (each as defined below). Issues of Notes under the Programme by ZF (Luxembourg) and ZF (UK) will be guaranteed as provided herein as to payments of principal, interest and additional amounts by ZIC (the “Guarantee” and the “Guarantor” respectively).
The Notes may be issued on a continuous basis to one or more of the Dealers below and any additional Dealer appointed under the Programme from time to time, which appointments may be for a specific issue or on an ongoing basis (each a “Dealer” and together the “Dealers”). References in this Base Prospectus to the “relevant Dealer” shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to purchase such Notes. References in this Base Prospectus to the “relevant Issuer” shall, in the case of any issue of Notes, be to the Issuer which has agreed to issue such Notes.
This document constitutes three base prospectuses (the “Base Prospectus”) for the purpose of Article 5.4 of Directive 2003/71/EC, as amended (the “Prospectus Directive”) and the applicable Final Terms (as defined on page 2) shall constitute Final Terms for the purpose of the Prospectus Directive.
This Base Prospectus has been approved by the Luxembourg Commission de Surveillance du Secteur Financier (the “CSSF”), which is the Luxembourg competent authority for the purpose of the Prospectus Directive as a base prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in Luxembourg for the purpose of giving information with regard to the issue of notes (“Notes”) issued under the Programme described in this Base Prospectus during the period of twelve months after the date of approval hereof. Application has been made for Notes issued under the Programme to be admitted to trading on the regulated market and listed on the Official List of the Luxembourg Stock Exchange (the “Official List”). The regulated market of the Luxembourg Stock Exchange is a regulated market for the purposes of the Markets in Financial Instruments Directive (2004/39/EC). Pursuant to Article 7(7) of the Luxembourg law dated 10 July 2005 on prospectuses for securities, as amended, by approving this Base Prospectus, the CSSF assumes no responsibility as to the economic and financial opportuneness of the transactions contemplated under this Base Prospectus or the quality or the solvency of the Issuers or the Guarantor.
With respect to a particular Series (as defined on page 2) of Notes issued in registered form (“Registered Notes”), the Registered Notes of each Tranche (as defined on page 2) of such Series will be sold outside the United States in reliance on Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”). Such Notes will be represented by a global note in registered form, without interest coupons (a “Reg. S Global Note”), which will be registered in the name of Citivic Nominees Limited as nominee for, and will be deposited with Citibank, N.A. as common depositary for, and in respect of interests held through, Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”). If a Reg. S Global Note is held under the New Safekeeping Structure (the “NSS”), the Reg. S Global Note will be delivered on or prior to the original issue date of the relevant Tranche to a common safekeeper (the “Common Safekeeper”) for Euroclear and Clearstream, Luxembourg. Prior to expiry of the period that ends 40 days after completion of the distribution of each Tranche of Notes, as certified by the relevant Dealer, in the case of a non-syndicated issue, or the Lead Manager, in the case of a syndicated issue (the “distribution compliance period”), beneficial interests in the Reg. S Global Note may not be offered or sold to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the U.S. Securities Act), and may not be held otherwise than through Euroclear and Clearstream, Luxembourg. Registered Notes in individual form will be issued in exchange for interests in the Regulation S Global Note upon compliance with the procedures for exchange as described in “Form of the Notes and the Capital Notes” below in the limited circumstances described in the applicable Final Terms. Registered Notes in individual registered form from the date of issue may also be sold outside the United States in reliance on Regulation S under the U.S. Securities Act.
Each Tranche of Notes issued in bearer form (“Bearer Notes”) (other than a Tranche of Listed Swiss Franc Notes, as to which see “Form of the Notes and the Capital Notes”) will initially be represented by a temporary bearer global Note (a “Temporary Global Note”) or, if so specified in the applicable Final Terms, a permanent Global Note (a “Permanent Global Note”, together with the Temporary Global Note, the “Bearer Global Notes”) which if the Bearer Global Notes are not intended to be issued in new global note (“New Global Note”, or “NGN”) form, will be deposited on or around the relevant issue date with a common depositary (the “Common Depositary”) for Euroclear and Clearstream Luxembourg, and if the Bearer Global Notes are intended to be issued in NGN form, will be deposited on or around the relevant issue date with a Common Safekeeper for Euroclear and Clearstream, Luxembourg. Beneficial interests in a Temporary Global Note will be exchangeable for either beneficial interests in a Permanent Global Note or Definitive Bearer Notes upon certification as to non-U.S. beneficial ownership as required by U.S. Treasury Regulations and thereafter any Permanent Global Note may be exchanged for Definitive Bearer Notes in the circumstances described in the applicable Final Terms, in each case in accordance with the procedures described in “Form of the Notes and the Capital Notes” below.
Arranger Citigroup
Dealers Barclays BofA Merrill Lynch Commerzbank Credit Suisse Goldman Sachs International J.P. Morgan The Royal Bank of Scotland
BNP PARIBAS Citigroup Crédit Agricole CIB Deutsche Bank HSBC Morgan Stanley UBS Investment Bank
2
Each of the Issuers accepts responsibility for the information contained in this Base Prospectus, and declares that, having taken all
reasonable care to ensure that such is the case, the information contained in this Base Prospectus is, to the best of their knowledge,
in accordance with the facts and contains no omission likely to affect its import.
Information contained in this Base Prospectus under the heading “Zurich Insurance Company Ltd” has been supplied by ZIC,
which accepts responsibility for the accuracy of such information. ZF (Luxembourg) and ZF (UK) do not accept responsibility for
the accuracy of such information, nor have they independently verified any such information.
Information contained in this Base Prospectus under the heading “Zurich Finance (Luxembourg) S.A.” has been supplied by ZF
(Luxembourg), which, together with ZIC, accepts responsibility for the accuracy of such information. ZF (UK) does not accept
responsibility for the accuracy of such information, nor has it independently verified any such information.
Information contained in this Base Prospectus under the heading “Zurich Finance (UK) plc” has been supplied by ZF (UK),
which, together with ZIC, accepts responsibility for the accuracy of such information. ZF (Luxembourg) does not accept
responsibility for the accuracy of such information, nor has it independently verified any such information.
This Base Prospectus is to be read in conjunction with all documents which are incorporated herein by reference (see “Documents
Incorporated by Reference” below). This Base Prospectus shall, save as specified herein, be read and construed on the basis that
such documents are so incorporated and form part of this Base Prospectus.
Notes will be issued in series (each a “Series”) having one or more issue dates and on terms otherwise identical (or identical other
than in respect of the first payment of interest), the Notes of each Series being intended to be interchangeable with all other Notes
of that Series. Each Series may be issued in tranches (each a “Tranche”) on different issue dates.
Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any
other terms and conditions not contained herein which are applicable to each Tranche of Notes will be set forth in the final terms
(the “applicable Final Terms” or “relevant Final Terms”) which, with respect to Notes to be listed on a stock exchange, will be
delivered to the stock exchange on or before the date of issue of the Notes of such Tranche. Notes that will not be admitted to
listing, trading and/or quotation by any listing authority, stock exchange and/or quotation system may also be issued pursuant to
the Programme by any of the Issuers.
No representation, warranty or undertaking, express or implied, is made and to the fullest extent permitted by law the Dealers and
the Trustee disclaim all responsibility or liability which they might otherwise have as to the accuracy or completeness of the
information contained in this Base Prospectus or any other information provided by any Issuer in connection with the Programme
or the Notes or their distribution. The statements made in this paragraph are made without prejudice to the responsibility of each Issuer under the Programme.
No person is or has been authorised to give any information or to make any representation not contained in or not consistent with
this Base Prospectus or any other information supplied in connection with the Programme or the Notes and, if given or made, such
information or representation must not be relied upon as having been authorised by any Issuer, the Trustee or any of the Dealers.
Neither this Base Prospectus nor any other information supplied in connection with the Programme or any Notes (i) is intended to
provide the basis of any credit or other evaluation or (ii) should be considered as a recommendation or constituting an invitation or
offer by any Issuer, the Trustee or any of the Dealers that any recipient of this Base Prospectus or any other information supplied
in connection with the Programme or any Notes should purchase any Notes. Each investor contemplating purchasing any Notes
should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the relevant Issuer or ZIC (where ZIC is not the relevant Issuer). Neither this Base Prospectus nor any other information
supplied in connection with the Programme or the issue of any Notes constitutes an offer by or on behalf of any Issuer, the Trustee
or any of the Dealers to any person to subscribe for or to purchase any Notes.
The delivery of this Base Prospectus does not at any time imply that the information contained herein concerning the Issuers is
correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is
correct as of any time subsequent to the date indicated in the document containing the same. The Dealers and the Trustee
expressly do not undertake to review the financial condition or affairs of the Issuers during the life of the Programme. Investors
should review, inter alia, the most recently published audited annual financial statements and, if published later, the most recently
published interim financial statements (if any) of the relevant Issuer and ZIC (where ZIC is not the relevant Issuer) when deciding
whether or not to purchase any Notes.
The Notes have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any
state or other jurisdiction of the United States and the Notes may include bearer Notes that are subject to U.S. tax law
requirements. Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of,
U.S. persons (as defined in Regulation S under the U.S. Securities Act) except in accordance with Regulation S under the U.S.
Securities Act or pursuant to an exemption from the registration requirements of the U.S. Securities Act (see “Subscription and
LON29242374/43
3
Sale” below) and hedging transactions involving the Notes may not be conducted unless in compliance with the U.S. Securities
Act.
The distribution of this Base Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions. The Issuers, the Trustee and the Dealers do not represent that this document may be lawfully distributed, or that any Notes may be
lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an
exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no
action has been taken by the Issuers, the Trustee or the Dealers which would permit a public offering of any Notes or distribution
of this document in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold,
directly or indirectly, and neither this Base Prospectus nor any advertisement or other offering material may be distributed or
published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations
and the Dealers have represented that all offers and sales by them will be made in compliance with applicable law. Persons into
whose possession this Base Prospectus or any Notes come must inform themselves about, and observe, any such restrictions. In
particular, there are restrictions on the distribution of this Base Prospectus and the offer or sale of Notes in the United States, the
European Economic Area, Ireland, the United Kingdom and Japan (see “Subscription and Sale” below).
The Programme has been assigned credit ratings by Standard & Poor’s Credit Market Services Europe Limited (“Standard & Poor’s”) of A+ for Senior Notes, A for dated and undated Subordinated Notes and A for Capital Notes. The Programme has been
assigned credit ratings by Moody's Investors Service Ltd. (“Moody’s”) of A1 for Senior Notes, A2 for Subordinated Notes, A3
for Capital Notes (where Trigger Event (as such term is defined in Condition 3(b) of the Terms and Conditions of the Capital
Notes) is not specified as being applicable in the relevant Final Terms) and Baa1 (where Trigger Event is specified as being
applicable in the relevant Final Terms). Both Standard & Poor’s and Moody’s are established in the EEA and registered under
Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies
(the "CRA Regulation"). A list of registered and certified rating agencies published by the European Securities and Markets
Authority ("ESMA") in accordance with the CRA Regulation can be found on its website, though this is not conclusive evidence
of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures being
taken against a relevant rating agency and the publication of the updated ESMA list. Standard & Poor’s and Moody’s are included in this list as at the date of this Base Prospectus.
Tranches of Notes may be rated or unrated. Where a Tranche of Notes is rated, the applicable rating(s) will be specified in the
relevant Final Terms. Whether or not each credit rating applied for in relation to a relevant Tranche of Notes will be issued by a
credit rating agency established in the European Union and registered under the CRA Regulation will be disclosed in the relevant
Final Terms. In general, European regulated investors are restricted from using a rating for regulatory purposes if such rating is
not issued by a credit rating agency established in the European Union and registered under the CRA Regulation unless the rating
is provided by a credit rating agency operating in the European Union before 7 June 2010 which has submitted an application for
registration in accordance with the CRA Regulation and such registration has not been refused. A rating is not a recommendation
to buy, sell or hold Notes and may be subject to suspension, change or withdrawal at any time by the assigning rating agency.
All references in this document to a “Member State” are references to a Member State of the European Economic Area, “U.S. dollars”, “U.S.$”, “$”, “USD” and “U.S. cent” refer to the currency of the United States of America, those to “euro”, “€” and
“EUR” are to the single currency adopted by those states participating in the European Monetary Union from time to time, those
to “Sterling”, “GBP” and “£” refer to the currency of the United Kingdom, those to “Swiss Francs”, “SFr” and “CHF” refer to
the currency of Switzerland. References in this document to “Listed Swiss Franc Notes” are to Notes denominated or payable in
Swiss Francs and listed on the SIX Swiss Exchange.
To ensure compliance with U.S. Treasury Department Circular 230, noteholders are hereby notified that: (A) any discussion of
U.S. Federal Tax issues in this Base Prospectus is not intended or written to be relied upon, and cannot be relied upon, by
Noteholders for the purpose of avoiding penalties that may be imposed on noteholders under the U.S. Internal Revenue Code of
1986 (the “Code”), (B) such discussion is included herein by the issuers in connection with the promotion or marketing (within
the meaning of Circular 230) by the Issuers and the Dealers of the transactions or matters addressed herein and (C) Noteholders should seek tax advice based on their particular circumstances from an independent tax advisor.
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Contents
RISK FACTORS .............................................................................................................................................6
INFORMATION INCORPORATED BY REFERENCE ......................................................................... 19
GENERAL DESCRIPTION OF THE PROGRAMME............................................................................. 22
FORM OF THE NOTES AND THE CAPITAL NOTES ......................................................................... 28
TERMS AND CONDITIONS OF THE SENIOR NOTES, DATED SUBORDINATED NOTES AND UNDATED
SUBORDINATED NOTES .......................................................................................................... 31
TERMS AND CONDITIONS OF THE CAPITAL NOTES .................................................................... 63
USE OF PROCEEDS ................................................................................................................................... 97
ZURICH INSURANCE COMPANY LTD ................................................................................................ 98
ZURICH FINANCE (LUXEMBOURG) S.A. ......................................................................................... 109
ZURICH FINANCE (UK) PLC ................................................................................................................ 110
FORM OF SENIOR GUARANTEE ......................................................................................................... 111
FORM OF SUBORDINATED GUARANTEE ....................................................................................... 116
TAXATION ................................................................................................................................................ 121
SUBSCRIPTION AND SALE .................................................................................................................. 128
FORM OF FINAL TERMS OF THE SENIOR NOTES, DATED SUBORDINATED NOTES AND UNDATED
SUBORDINATED NOTES ........................................................................................................ 131
FORM OF FINAL TERMS OF THE CAPITAL NOTES....................................................................... 139
GENERAL INFORMATION .................................................................................................................... 146
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IN CONNECTION WITH THE ISSUE OF ANY TRANCHE OF NOTES, THE DEALER OR DEALERS (IF ANY) NAMED AS THE STABILISING MANAGER(S) IN THE RELEVANT FINAL TERMS (OR ANY PERSON ACTING ON BEHALF OF ANY STABILISING MANAGER(S)) MAY OVERALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES OF THE SERIES OF WHICH SUCH TRANCHE FORMS PART AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER(S) (OR ANY PERSON ACTING ON BEHALF OF ANY STABILISING MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE RELEVANT TRANCHE OF NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE RELEVANT TRANCHE OF NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE RELEVANT TRANCHE OF NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
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RISK FACTORS
Prospective investors should carefully consider all of the information set forth in this Base Prospectus, the applicable Final Terms and any documents incorporated by reference before deciding to invest in any Notes or Capital Notes. Prospective investors should have particular regard to, among other matters, the considerations set out in this Risk Factors section of the Base Prospectus. The following is not intended as, and should not be construed as, an exhaustive list of relevant risk factors. There may be other risks that a prospective investor should consider that are relevant to its own particular circumstances or generally.
Each of the Issuers and ZIC believe that the following factors may affect their ability to fulfil its obligations under Notes or Capital Notes issued under the Programme. Most of these factors are contingencies which may or may not occur and none of the Issuers nor ZIC are in a position to express a view on the likelihood of any such contingency occurring. In addition, factors which are material for the purpose of assessing the market risks associated with Notes or Capital Notes issued under the Programme are also described below. None of the Issuers or ZIC represent that the statements below regarding the risks of holding any Notes or Capital Notes are exhaustive.
• Factors that may affect the Issuers’ ability to comply with their obligations under or in connection with Notes or Capital Notes issued under the Programme or of ZIC to comply with its obligations under its Guarantee
Reliance of investors on the creditworthiness of the relevant Issuer and ZIC (as applicable)
The Notes, the Capital Notes and the Guarantee (as applicable) will constitute unsecured, senior or subordinated obligations of the
relevant Issuer and ZIC (as applicable), respectively, and will rank equally among themselves and equally with all other
unsecured, senior or subordinated obligations of the relevant Issuer and ZIC (as applicable), respectively. The Capital Notes will
constitute unsecured, subordinated obligations of ZIC and rank equally with any subordinated obligations of ZIC which whether
now or in the future rank or are expressed to rank pari passu with the claims of the holders of the Capital Notes. It should be noted
that mandatory provisions of law may operate such that certain other obligations of the relevant Issuer or ZIC must be satisfied in
preference to their obligations under the Notes, the Capital Notes and the Guarantee (as applicable). In particular, ZIC is subject to certain insurance and financial services laws, regulations and policies which include provisions whereby certain assets are tied to
obligations towards the policyholders and cannot be used for settlement of obligations to other creditors. This could affect its
position under the Notes, the Capital Notes or the Guarantee (as applicable) either in its capacity as Guarantor or as Issuer (as
applicable).
Noteholders are dependent solely on the ability of the relevant Issuer and ZIC to comply with its obligations under the Notes, the
Capital Notes and the Guarantee (as applicable), and do not have the benefit of collateral or other forms of credit support.
Any actual or perceived deterioration in the financial condition, results of operations or cashflow of the relevant Issuer or ZIC
could have a negative effect on the ability of the relevant Issuer or ZIC, as the case may be, to comply with its obligations under
the Notes, the Capital Notes and the Guarantee (as applicable). In addition, investment in the Notes or the Capital Notes involves the risk that subsequent changes in actual or perceived creditworthiness of the relevant Issuer and ZIC (as applicable) may
adversely affect the market value of the Notes or the Capital Notes.
Ratings
The financial strength and issuer credit ratings assigned to ZIC and other subsidiaries of Zurich Insurance Group Ltd (“ZIG” and,
together with its subsidiaries, the “Zurich Insurance Group”) may be changed, suspended or withdrawn at any time by rating
agencies. A downgrade, or the potential for such a downgrade, to the financial strength or issuer credit ratings assigned to ZIC or
other Zurich Insurance Group entities may have an adverse effect on their competitive and financial position. Rating agencies look
at a range of rating factors. For example large losses due to natural catastrophes could weaken the financial position of ZIC or
other Zurich Insurance Group entities and trigger a downgrade of their respective ratings. The Zurich Insurance Group has issued
debt through various entities. Ultimately the credit ratings of these debt issues are linked to the financial strength ratings of ZIC. Changes in credit ratings may affect both the ability to obtain new financing and the cost of financing.
The businesses, earnings and financial condition of ZIC and its operating subsidiaries are subject to the global economic and financial market environment and thus vulnerable to any slowdown or potential disruptions. The performance of ZIC and its operating subsidiaries has been and will continue to be influenced by the economic conditions of the countries in which it operates. Although the global financial system is recovering from the difficulties which first manifested themselves in August 2007 and culminated with the bankruptcy filing by Lehman Brothers in September 2008, a new dislocation of the financial system or the economy cannot be ruled out. Such conditions could lead to unprecedented levels of illiquidity, resulting in the development of significant problems for a number of the world’s largest countries, corporate and financial institutions many of which are customers and counterparties of ZIC and its operating subsidiaries in the ordinary course of business. The performance of ZIC and its operating subsidiaries may be affected by economic conditions impacting sovereign states including euro-zone member states. For example, the financial problems recently experienced by certain euro-zone member states
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may lead to the issue of significant volumes of debt, which may in turn reduce demand for debt issued by financial institutions and corporate borrowers. This could adversely affect the Zurich Insurance Group’s access to the debt capital markets and may increase its funding costs, having a negative impact on its earnings and financial condition. Volatility and disruption of capital and credit markets (including that arising by reason of the financial difficulties experienced by sovereign states described above) could affect the availability and cost of credit for financial institutions, including ZIC and its operating subsidiaries, and could continue to impact the credit quality of customers and counterparties. Such conditions, alone or in combination with regulatory changes or actions of other market participants, may cause ZIC and its operating subsidiaries to experience reductions in business activity, increased funding costs and funding pressures, decreased asset values, write-downs and impairment charges, lower profitability, insufficient capital to match regulatory requirements, or the incurrence of losses. In addition, ZIC and its operating subsidiaries will continue to be exposed to the risk of loss if major counterparty financial institutions fail or are otherwise unable to meet their obligations. Their performance may also be affected by future recovery rates on assets and the historical assumptions underlying asset recovery rates, which may no longer be accurate given the unprecedented market disruption and general economic instability. Invested assets can become illiquid resulting in inability to monetise them if needed to meet unexpected liquidity needs. The precise nature of all the risks and uncertainties faced by ZIC and its operating subsidiaries as a result of current economic conditions cannot be predicted and many of these risks are outside their control. The actual or perceived failure or worsening credit risk of ZIC’s and its subsidiaries’ counterparties has adversely affected and could continue to adversely affect ZIC and its subsidiaries. ZIC’s and its subsidiaries’ ability to engage in routine financial transactions has been and will continue to be adversely affected by the actual or perceived failure or worsening credit of its counterparties, including other financial institutions and corporate borrowers. ZIC and its subsidiaries have exposure to many different industries and counterparties and routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, other insurance companies and other institutional clients. As a result, defaults by, or even the perceived lack of creditworthiness of or concerns about financial services institutions or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by ZIC and its subsidiaries or by other institutions. Many of these transactions expose ZIC and its subsidiaries to credit risk in the event of default of ZIC’s and its subsidiaries’ counterparty or client. In addition, ZIC’s and its subsidiaries’ credit risk is exacerbated when the collateral it holds cannot be realised or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure that is due to ZIC and its subsidiaries, which is most likely to occur during periods of illiquidity and depressed asset valuations. Any such losses could have a material adverse effect on ZIC’s and its subsidiaries’ results of operations and financial condition. ZIC’s and its subsidiaries’ earnings and financial condition have been, and their future earnings and financial condition are, affected by asset valuations resulting from market conditions. Financial markets can be subject to significant stress conditions, where steep falls in perceived or actual asset values have been accompanied by a severe reduction in market liquidity, as exemplified by events affecting asset backed collateralised debt obligations (“CDOs”), the U.S. sub-prime residential mortgage market, the leveraged loan market and peripheral euro-zone debt markets. In dislocated markets, hedging and other risk management strategies have proven not to be as effective as they are in normal market conditions due in part to the decreasing credit quality of hedge counterparties, including monoline and other insurance companies and credit derivative product companies. Moreover, market volatility and illiquidity makes it difficult to value certain of ZIC’s and its subsidiaries’ exposures. Valuations in future periods, reflecting, among other things, then-prevailing market conditions and changes in the credit ratings of certain of ZIC’s and its subsidiaries’ assets, may result in significant changes in the fair values of ZIC’s and its subsidiaries’ exposures, even in respect of exposures for which the ZIC Group has previously recorded write-downs. In addition, the value ultimately realised by ZIC and its subsidiaries may be materially different from the current or estimated fair value. Any of these factors could require ZIC and its subsidiaries to recognise further significant write-downs or realise increased impairment charges, any of which may adversely affect their capital position, their financial condition and their results of operations.
Factors such as consumer spending, business investment, government oversight, the volatility and strength of the capital
markets, and inflation all affect the business and economic environment and, ultimately, the amount and profitability of ZIC’s
and its subsidiaries’ business.
In an economic downturn characterised by higher unemployment, lower family income, lower corporate earnings, lower business
investment and lower consumer spending, the demand for ZIC’s and its subsidiaries’ financial and insurance products could be
adversely affected. In addition, ZIC and its subsidiaries may experience an elevated incidence of claims and lapses or surrenders
of policies. The ZIC Group’s policyholders may choose to defer paying insurance premiums or stop paying insurance premiums
altogether. Adverse changes in the economy could affect earnings negatively and could have a material adverse effect on its
business, results of operations and financial condition. Because insurance assets serve as collateral for policyholder liabilities in
most regulated jurisdictions, even limited losses on invested assets can have a severe adverse impact on the value and/or on cash flows available to service liabilities related to issued senior or subordinated debt of ZIC and its subsidiaries. In addition, regulators
or courts may block, confiscate or otherwise influence the status of ZIC and its subsidiaries’ invested assets, impairing their ability
to service their obligations.
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The recent global financial crisis has also raised the possibility of future legislative and regulatory actions that could further
impact ZIC and its subsidiaries’ business. ZIC and its subsidiaries cannot predict whether or when such actions may occur, or
what impact, if any, such actions could have on ZIC and its subsidiaries’ business, results of operations and financial condition.
For example, the U.S. federal government does not directly regulate the business of insurance. Federal legislation and
administrative policies in several other areas can, however, significantly and adversely affect insurance companies in the U.S.
These areas include financial services regulation, securities regulation, pension regulation, privacy, tort reform legislation,
consumer protection and taxation. For example, in 2010 President Obama signed into law the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the “Dodd-Frank Act”), which effects sweeping reform of the financial services
industries. While the Dodd-Frank Act does not implement the federal regulation of insurance, it does establish federal measures
that will impact the U.S. insurance business and pre-empt certain state insurance measures. It may then lay the foundation for
ultimately establishing some form of federal regulation of insurance in the future. Although various forms of direct federal
regulation of insurance have been proposed in the past, there is at present no credible proposal before Congress to regulate the
business of insurance at the federal level, and it is difficult to predict that any “optional federal charter” legislation will be
introduced in the coming year. Nevertheless, the experience of the financial markets and certain financial institutions in recent years increases the possibility that the U.S. federal government may seek to heighten its oversight of insurers, including possibly
through a federal system of insurance regulation and/or through the expansion of the oversight responsibilities and mandates of
existing or newly created regulatory bodies. ZIC and its subsidiaries cannot predict whether such proposals will be adopted, or
what impact, if any, such proposals or, if enacted, such laws, could have on the ZIC Group’s business, financial condition or
results of operations.
The ZIC Group has credit exposure arising from OTC derivative contracts
The ZIC Group has credit exposure arising from over-the-counter derivative contracts which are carried at fair value. The fair
value of these over-the-counter derivatives, as well as the ZIC Group’s exposure to the risk of default by the underlying
counterparties, depends on the valuation and the perceived credit risk of the instrument against which protection has been bought.
The ZIC Group relies on third-party vendors for technology and information systems that are critical to its business.
The ZIC Group depends significantly on the effective operation of its technology and information systems. A substantial part of
its technology and information systems are provided by third-party vendors. Accordingly, if any key vendor were unable to
continue to provide its products or services or keep pace with advancements in technology, the ZIC Group may suffer operational
impairments which could have a material adverse effect on its business, financial condition or results of operations. In addition,
any failure on the part of any key vendor to protect the personal information of the ZIC Group’s customers, claimants or
employees could interrupt or damage the ZIC Group’s operations, harm its reputation, lead to a loss in competitive advantage or to
lawsuits or regulatory actions or otherwise have a material adverse effect on its business, financial condition or results of
operations.
If the ZIC Group experiences difficulties with data security, its ability to conduct its business could be negatively impacted.
The ZIC Group’s operations rely on the secure processing, storage and transmission of confidential and other information in its
computer systems and networks. Computer viruses, hackers, employee misconduct or other external hazards could expose its data
systems to security breaches. As part of its business, the ZIC Group routinely transmits and receives personal, confidential and
proprietary information by email and other electronic means. Although the ZIC Group believes that it has effective controls in
place to secure transmission capabilities with third-party vendors and others with whom it does business, there always remains a
residual risk of a data security incident.
The residual risks, and increased regulatory requirements regarding data security, could potentially expose the ZIC Group to data
loss, monetary or reputational damages or significant increased compliance costs. As a result, the ZIC Group’s ability to conduct
its business might be adversely affected. Risk of insufficiency of loss reserves
ZIC and its operating subsidiaries maintain loss reserves for their insurance and run-off reinsurance businesses to cover estimated
liability for losses and loss adjustment expenses for reported and unreported losses incurred as of the end of each accounting
period. Such loss reserves may prove to be inadequate to cover actual losses and benefits experience. Additional losses, including
losses arising from changes in the interpretation of legal liability, or the assessment of damages caused by judicial decisions or
changes in law, the type of magnitude of which cannot be foreseen, may emerge in the future.
Loss reserves are established such that the provision for losses and benefits represents an amount that is believed to be greater
than the mathematically expected amount that will be required to ultimately settle all claims incurred as of the fiscal year-end and interim statements. As such the provision makes allowance for identified sensitivities underlying the reserve estimates. These
estimates are based on actuarial and statistical projections, at a given time, of facts and circumstances known at that time and
estimates of trends in loss severity and other variable factors, including new concepts of liability or other changes in legal
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precedents and general economic conditions. Changes in these trends or other variable factors could result in claims in excess of
loss reserves.
For some types of losses, most significantly long tail exposures under workers’ compensation and general liability contracts, as well as losses related to asbestos and environmental pollution, it has been necessary, and may over time be necessary, to increase
estimated ultimate loss and, therefore, the related loss reserves. Consequently, actual losses, benefits and related expenses paid
may differ from estimates reflected in the loss reserves in the financial statements of ZIC or its operating subsidiaries.
Any insufficiencies in or need to increase loss reserves maintained by ZIC or its operating subsidiaries for future claims on insurance obligations underwritten by ZIC or its operating subsidiaries could have a material adverse effect on the financial condition, results of operations and cash flows of ZIC or its operating subsidiaries (as applicable). Life insurance:
Biometric Risks Assumptions about mortality and morbidity used in pricing products are based on information provided from company and industry statistics and market information. These assumptions relate to the ZIC Group’s best estimate of the experience in each year. However a global pandemic, such as avian flu or swine flu, may produce an increase in mortality or morbidity in excess of its assumptions. This will lead to the number of claims being paid being greater than planned. These types of events are considered when assessing and reviewing a variety of financial covers, such as reinsurance. Life expectancies continue to increase in the world’s developed areas. If mortality estimates, including rates of future mortality improvement, prove to understate such rates of improvement, liabilities to policyholders in connection with pensions and annuity products will increase at a rate faster than expected. This may lead to significant unexpected losses.
Surrenders Surrenders of deferred annuities and life insurance products can result in losses and decreased revenues if surrender levels differ significantly from assumed levels. Surrenders could require the ZIC Group to dispose of assets earlier than planned, possibly at a loss. Moreover, surrenders require faster amortisation of the ZIC Group’s deferred acquisition costs associated with the original sale of a product, thus reducing its net income.
Options and guarantees Some life products contain options and guarantees for policyholders, such as guaranteed interest rates and surrender guarantees. These vary by product and country in which they have been written. Adverse financial market movements may result in increases in the value of these guarantees. The long term characteristic of the liabilities, especially for annuity and pension products, represent a potential risk for the ZIC Group’s life business. Asset liability management follows this risk closely, and financial hedges are introduced when deemed necessary. Similarly, a significant increase in yield curves might encourage financially aware policyholders to lapse their contracts on guaranteed terms, resulting in significant losses and decreased revenues.
Variable Life Insurance Contracts with Guarantees or Stable Value Protection Features Certain of the ZIC Group’s subsidiaries sell variable life insurance products under which premiums are deposited into underlying funds selected by the policyholder and the policyholder bears the full investment risk associated with such funds. However, certain variable life insurance products have also been sold which contain guarantees or stable value protection features for which ZIC Group subsidiaries have recorded additional policyholder benefits. Variable life insurance products that contain guarantees arise primarily in the subsidiary Zurich American Life Insurance Company (“ZALICO”) (formerly known as Kemper Investors Life Insurance Company or KILICO) which in the past wrote variable annuity contracts that provide policyholders with certain guarantees related to minimum death and income benefits. After 2001, ZALICO no longer issued these contracts. The ZIC Group has a dynamic hedging strategy to manage its economic exposure and reduce the volatility associated with this closed book of variable annuity contracts. New life insurance products developed with financial guarantees are subject to review and approval by the ZIC Group-level product approval committee. Variable life insurance products that contain stable value protection features (“SVPs”) are designed to amortise on a quarterly basis the investment gains and losses of the investment portfolios underlying these contracts, which are owned by banks (Bank Owned Life Insurance or BOLI) and other companies (Company Owned Life Insurance or COLI). Premiums received from policyholders under these policies are invested in separate account portfolios. Throughout the life of the policies, policyholders are entitled, in addition to mortality cover, to the tax-exempt investment returns of such separate account portfolios. The policies are long duration contracts providing charges and benefits over a policy life that can be greater than 45 years. When SVPs form part of these investment portfolios, they reduce the volatility of the policyholders’ investment returns. In the event that a policy is surrendered which has a positive SVP value, the policyholder would be entitled to recover such SVP value as well as the market value of the underlying investments. Certain policy features as well as the applicable tax regulations provide disincentives for surrender. The ZIC Group monitors the risk of surrender on an ongoing basis and considers the likelihood of surrender as an input factor to the model to determine the fair value of the SVPs. The fair value of the derivative liability recognised in respect of the SVPs, was nil in each of 31 December 2013 and 2012. The notional SVP derived value was USD 397 million and USD 93 million
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as of 31 December 2013 and 2012, respectively, representing the total loss before surrender charges in the unlikely event that all policies would have been surrendered on those dates. Inability of reinsurers to meet their obligations and unavailability of reinsurance ZIC and its operating subsidiaries transfer exposure to certain risks to others through reinsurance arrangements. The availability, amount and cost of reinsurance depend on general market conditions and may vary significantly. Although periodic reviews of the financial statements and reputations of the relevant reinsurers are conducted, such reinsurers may become financially unable or unwilling to honour their commitments by the time they are called upon to pay amounts due, which may not occur for many years. In addition, reinsurance may prove inadequate to protect against losses or may become unavailable in the future at commercially reasonable rates.
Competition risks
ZIC and its operating subsidiaries participate in a highly competitive market. Developments in this market and increased
competition may adversely affect the financial position of ZIC and its operating subsidiaries. Continued consolidation of the insurance industry could lead to market-wide price reductions resulting in pressure on margins. Such competitive pressure may
lead to adjustments to policy terms, withdrawal from or reduction of capacity in certain business lines or reduction of prices
resulting in decreased margins.
Foreign currency exchange risks
Due to the international nature of their businesses, ZIC and its subsidiaries are exposed to various currency exchange risks which
can affect liquidity, profit and loss, shareholders’ equity, capital position and the overall economic enterprise value. ZIC’s
consolidated financial statements are reported in U.S. Dollars, but its assets, liabilities, income and expenses are denominated in
many currencies with significant amounts notably in Euro, Swiss Franc, British Pound, and U.S. Dollars. Therefore, fluctuations
in exchange rates between currencies could impact the consolidated financial condition, results of operations and cash flow from year to year of ZIC.
Regulatory investigations, litigation and settlement risks
ZIC and its subsidiaries are, and may in the future be, involved in civil litigation and/or regulatory investigations, the outcomes of
which cannot be predicted.
The initiation of litigation proceedings and/or regulatory investigations and their outcomes may adversely affect the financial
position of ZIC and its subsidiaries.
For further details see “Zurich Insurance Company Ltd — Legal Proceedings and Regulatory Investigations” below.
Regulatory or legal changes
Insurance laws, regulations and policies currently governing ZIC and its operating subsidiaries may change at any time in ways
which may adversely affect their business. Furthermore, it is not possible to predict the timing or form of any future regulatory
initiatives. ZIC and its subsidiaries are subject to applicable government regulation in each of the jurisdictions in which business is
conducted. The insurance industry is also affected by political, judicial and other legal developments which have at times in the
past resulted in new or expanded theories of liability.
Satisfaction of increased regulatory requirements could require additional regulatory capital, involve additional expense or
otherwise adversely affect ZIC’s financial position and that of its operating subsidiaries.
In Switzerland, risk based capital requirements are regulated in accordance with the Swiss Solvency Test (the “SST”). Swiss
insurers are required to build up sufficient risk bearing capital in order to cover their target capital under the SST since 1 January
2011.
On 25 November 2009 the Directive on Solvency II (“Solvency II”) was adopted in the European Union. Solvency II aims to
reflect the latest developments in prudential supervision, actuarial methods and risk management. It includes economic risk-based
solvency requirements, which are more risk sensitive and more sophisticated than Solvency I. Solvency II capital requirements
also consider all material risks and their interactions. As part of the risk management system, all EU/EEA insurance and
reinsurance entities will be required to conduct their own risk and solvency assessment, including the assessment of the overall
solvency needs reflecting their specific risk profiles. As part of the disclosure provisions, companies will have to publicly report
their solvency and financial condition. As a result of these new regulations, there is a risk that the effect of the measures finally
adopted could be adverse for ZIC and its subsidiaries, including but not limited to potentially requiring a significant increase in the amount of capital required to support its business.
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According to Solvency II, the European Commission may, after consultation with the European Insurance and Occupational
Pensions Authority (the “EIOPA”), adopt a decision on equivalence of third-country systems. In its first assessments, EIOPA has
positively assessed the equivalency of the Swiss system with Solvency II. However, the criteria established for such assessments
may still be subject to changes and in the event of such criteria being changed, EIOPA is committed to revise its assessment as to the equivalency of the Swiss system with Solvency II. The European Commission will make its decisions on equivalence once
such review is complete.
In the U.S., new reserving standards are being developed by the U.S. National Association of Insurance Commissioners (“NAIC”)
that would replace current statutory reserving practices for life insurance products and variable annuities with a principles-based
approach to valuation of capital and reserves. In March 2010, the U.S. enacted comprehensive health care reforms including
various health insurance and related provisions that will be phased in over the next eight years. U.S. administrative agencies are
developing specific regulations for the implementation of these provisions. The potential impact of these developments on the
U.S. health and related insurance markets remains unclear. In addition, there is increasing legislative and regulatory activity in
light of the recent financial crisis which may adversely impact bank and non-bank financial companies’ business activities and
investment activities. These actions include, but are not limited to, the enactment of the Dodd-Frank Act, which imposes a new regulatory framework over the U.S. financial services industry and the consumer credit markets in general, and requires the
Securities and Exchange Commission (“SEC”) and other federal agencies to propose regulations that provide more stringent
guidelines and oversight of bank and non-bank financial companies. The Dodd-Frank Act also established the Financial Services
Oversight Council (“FSOC”) which is authorised to designate certain non-bank financial companies (including insurance
companies) as “systemically significant” and thus subject to oversight by the Board of Governors of the Federal Reserve. The
Dodd-Frank Act also established a Federal Insurance Office (“FIO”) and contains provisions that pre-empt certain state insurance
laws. In addition, FSOC and FIO are authorised to study and monitor the insurance industry and its regulation in the U.S. and
report their findings to Congress. These efforts may result in calls for a more active federal role in insurance regulation. Currently,
the U.S. federal government does not directly regulate the business of insurance. However, federal legislation and administrative
policies in several other areas can significantly and adversely affect insurance companies. These areas include financial services
regulation, securities regulation, pension regulation, privacy, tort reform legislation and taxation. For example, in 2010 President
Obama signed into law the Dodd-Frank Act which effects sweeping reform of the financial services industries. While the Dodd-Frank Act does not implement the federal regulation of insurance, it does establish federal measures that will impact the U.S.
insurance business and pre-empt certain state insurance measures. It may then lay the foundation for ultimately establishing some
form of federal regulation of insurance in the future. Other initiatives may be brought before the Congress in the future which seek
to regulate the business of insurance at the federal level. ZIC and its subsidiaries cannot predict whether any such proposals will
be made (and, if made, whether such proposals will be adopted) nor can they predict what impact, if any, such proposals or, if
enacted, such laws, could have on the ZIC Group’s business, financial condition or results of operations.
Recent financial and economic uncertainties have provoked a number of proposals for reform and additional regulation of
financial institutions and markets from regulators, governments, groups of governments (such as the G20) and others. While these
proposals address the issue of systemic risk and the perceived gaps in the regulatory framework which might have contributed to
the financial crisis, inter alia, possible changes in accounting standards (including fair value accounting), management remuneration structures, internal control systems, capital and liquidity requirements and branch structures. They seek greater
cooperation and information exchange between regulatory supervisors internationally and improved supervision of multinational
groups. These proposals were initially primarily focused on the banking sector but they have expanded to the insurance sector and
many are still under development. Accordingly, the financial consequences for the insurance sector generally (and particularly for
ZIC and its subsidiaries) of the implementation of all or some of such proposals cannot yet be determined.
Regarding the insurance sector, the International Association of Insurance Supervisors (the “IAIS”), pursuant to the mandate
given to IAIS by the Financial Stability Board (the “FSB”), in July 2013 published the methodology used to identify systemically
relevant insurers as well as policy measures to be applied to them. The initial list of globally systemically important insurers
("GSII"s) was published at that time and included nine insurers. This list will be reviewed and, if necessary, updated on an annual
basis, and it is unclear as to whether ZIC, or any of its subsidiaries, would be labelled as GSIIs by the FSB. Those policy measures
include enhanced supervision by the national supervisor, the need to engage in recovery and resolution planning and the application of higher loss absorption measures (i.e. capital) to systemically relevant activities. In addition, the IAIS is working on
a project to introduce a common framework for the supervision of internationally active insurance groups – regardless of their
status as GSIIs.
The above proposals, if adopted, could require additional regulatory capital of ZIC and its subsidiaries, require changes to the way
in which ZIC and its subsidiaries carry on their business, lead to additional expense or otherwise adversely affect ZIC’s financial
position and that of its operating subsidiaries.
Natural and man-made catastrophe risks
General insurance companies frequently experience losses from catastrophes. Catastrophes may have a material adverse effect on the financial condition, results of operations and cash flows of ZIC and its operating subsidiaries.
Natural catastrophes include, but are not limited to hurricanes, floods, windstorms, tidal waves, earthquakes, tornadoes, fires,
severe hail and severe winter weather, and are inherently unpredictable in terms of both their occurrence and severity.
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Catastrophes can also be man-made, such as terrorist attacks, explosions, fires and oil spills. The incidence and severity of these
catastrophes in any given period are inherently unpredictable.
Deferred tax assets and liabilities
Deferred tax assets and liabilities of ZIC and its subsidiaries are recorded in the tax paying entities throughout the world, which
may include several legal entities within each tax jurisdiction. The recoverability of the deferred tax asset of each taxpayer is
based on its ability to utilise the deferred tax asset over a reasonable period of time. ZIC or the relevant subsidiary may not be able
to fully recover its deferred tax assets in each jurisdiction.
Tax authorities may dispute submitted tax returns of the Zurich Insurance Group, which could adversely affect it.
Tax authorities throughout the world who examine submitted tax returns may dispute the basis of computation and propose
adjustments which may lead to additional tax charges, interest and/or penalties.
Tax liabilities of the Zurich Insurance Group may be adversely affected by proposed U.S. tax legislation.
In 2008, the Staff of the U.S. Senate Committee on Finance released a discussion draft (“Discussion Draft”) which proposes to
disallow deductions for certain reinsurance premiums paid by U.S. property and casualty insurance companies to non-U.S.
affiliates of those companies. The Discussion Draft proposal is similar to a measure that was introduced in the U.S. House of
Representatives in 2008 and 2009 by Representative Neal. A similar proposal was also contained in President Obama’s Fiscal
Year 2015 Revenue Proposals, with some modifications. Recent tax reform discussion drafts released separately by the U.S.
Senate and House tax writing committees also reflect such measures. If enacted in any of its present forms, the measure could
adversely affect the Zurich Insurance Group and certain of its affiliates by increasing materially their U.S. tax liability. In
addition, if the measure were enacted it may be necessary for the Zurich Insurance Group and certain of its affiliates to take steps
to alter the manner in which they conduct their business. Whether the measure will be enacted in any of its present forms or in
another form cannot be predicted. Moreover, until the terms of any final measure are known, the impact on the Zurich Insurance Group and certain of its affiliates of the measure and any business restructuring in response to such a measure cannot be
evaluated.
FATCA Withholding
Certain provisions of U.S. tax law (commonly referred to as “FATCA”) impose a 30 per cent U.S. withholding tax on certain
“pass-thru” payments by foreign financial institutions. Treasury Regulations provide that the withholding tax will not be imposed
on pass-thru payments by foreign financial institutions until after 31 December 2016 at the earliest.
Although the application of the FATCA withholding tax to pass-thru payments by foreign financial institutions is still uncertain,
as the scope of these rules are still being determined by U.S. tax authorities, it is possible that in some circumstances payments by ZF (Luxembourg), ZF (UK) or ZIC on Notes or Capital Notes after 31 December 2016 to persons failing to meet certain FATCA
reporting or certification requirements may be treated as “pass-thru payments” subject to U.S. withholding tax, for a Note or
Capital Note issued or deemed issued after the date that is six months after the date on which final U.S. Treasury Regulations
defining the term “foreign passthru payment” are filed with the Federal Register or, if the Note or Capital Note is treated as equity
for U.S. tax purposes, whenever issued. Under the Terms and Conditions of the Senior Notes, Dated Subordinated Notes and
Undated Subordinated Notes and the Terms and Conditions of the Capital Notes, no Additional Amounts are due with respect to a
tax imposed under the FATCA rules. Holders of Notes and Capital Notes should consult their own tax advisers on how these rules
may apply to payments they receive under the Notes and the Capital Notes.
Adequacy of resources to meet pension obligations
There is a risk that provisions for present and/or future obligations to employees under the ZIC Group’s pension plans and other defined post-employment benefits may not be adequate. In assessing the ZIC Group’s liability for defined benefit pension plans
and other post-employment plans, critical judgments include estimates of mortality rates, rates of employment turnover, disability,
early retirement, discount rates, expected long-term rates of return on plan assets, future salary increases, future pension increases,
increases in long-term healthcare costs and inflation rates. These assumptions may differ from actual results due to changing
economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result
in variability of the ZIC Group’s pension funding requirements and pension income or expense recorded in future years. In
addition, pension related regulations are subject to review and change in many countries in which the ZIC Group operates. Further
changes to actuarial assumptions or capital requirements in jurisdictions in which the ZIC Group has employees, and other factors
such as business restructuring, could adversely affect its ability to meet its pension funding obligations.
Farmers Group, Inc.’s management fees for its services may drop significantly
Farmers Group, Inc. provides non-claims related insurance management services for the Farmers Insurance Exchange, Fire
Insurance Exchange and Truck Insurance Exchange (reciprocal insurers domiciled in California, USA) and their subsidiaries
(together, the “Farmers Exchanges”) as their attorney-in-fact. Management fees earned by it are based upon the volume of gross
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premiums earned by the Farmers Exchanges, whose ability to continue writing insurance is dependent upon, inter alia, statutory
surplus levels and price competition. Any deterioration in the volume of gross premiums earned by the Farmers Exchanges may
therefore affect the level of management fees received by Farmers Group, Inc. for its management services.
• Risks related to the structure of a particular issue of Notes and Capital Notes
Set out below is a description of the most common risk factors related to the Notes or the Capital Notes:
Notes and Capital Notes may not be a suitable investment for all investors
A range of different Notes and Capital Notes may be issued under the Programme. A number of these Notes and Capital Notes
may have features which contain particular risks for potential investors. Each potential investor in any Notes and Capital Notes
must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
(i) have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes and Capital Notes, the merits and risks of investing in the relevant Notes and Capital Notes and the information contained or incorporated by
reference in this Base Prospectus, the applicable Final Terms or any applicable supplement;
(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation,
an investment in the relevant Notes and Capital Notes and the impact such investment will have on its overall investment
portfolio;
(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant Notes and Capital
Notes, including where principal or interest is payable in one or more currencies, or where the currency for principal or
interest payments is different from the potential investor’s currency;
(iv) understand thoroughly the terms of the relevant Notes and Capital Notes and the applicable Final Terms, and be familiar with the behaviour of the financial markets; and
(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and
other factors that may affect its investment and its ability to bear the applicable risks.
Notes or Capital Notes issued at a substantial discount
The market values of securities issued at a substantial discount to their nominal amount tend to fluctuate more in relation to
general changes in interest rates than do prices for conventional interest-bearing securities.
The Issuers’ obligations under Subordinated Notes are subordinated
The obligations of the relevant Issuer under Subordinated Notes will rank junior in priority of payment to the claims of Senior
Creditors (as defined in Condition 2 of the Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated
Subordinated Notes). Furthermore, the relevant Issuer shall, if so specified in the Final Terms, have the option to defer payments
of interest on Subordinated Notes when such interest has accrued in respect of an Interest Period which ends on an Optional
Interest Payment Date (as such term is defined in Condition 4(d) of the Terms and Conditions of the Senior Notes, Dated
Subordinated Notes and Undated Subordinated Notes) and shall, if so specified in the Final Terms, also be required to defer
payment of interest on Subordinated Notes if a “Solvency Event” (as such term is defined in Condition 4 of the Terms and
Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes) has occurred and is continuing.
Certain Arrears of Interest may only be payable on Subordinated Notes following the prior written approval of Swiss Financial
Market Supervisory Authority FINMA (“FINMA”) or any Successor Authority as more fully set out in Condition 4 (d) (iii) of the Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes.
Although Subordinated Notes may pay a higher rate of interest than comparable Notes which are not subordinated, there is a real
risk that an investor in Subordinated Notes will lose all or some of his investment should the relevant Issuer become insolvent.
The relevant Issuer’s obligations in respect of Dated Subordinated Notes and Dated Capital Notes to repay the Final
Redemption Amount on the Maturity Date may be extended indefinitely If the Maturity Date of a Dated Subordinated Note or Dated Capital Note occurs when a “Solvency Event” (as defined in
Condition 4 of the Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes and in
Condition 3 of the Terms and Conditions of the Capital Notes) has occurred and is continuing, then such Maturity Date will, if so
specified in the applicable Final Terms, be extended until such event no longer exists, unless prior approval by FINMA or any
Successor Authority is given for repayment.
The Senior ZIC Guarantee and the Subordinated ZIC Guarantee are limited to the Guarantee Amount
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The maximum liability of the Guarantor under the Senior ZIC Guarantee and the Subordinated ZIC Guarantee shall not exceed in
aggregate the Guarantee Amount as defined in the relevant Guarantee.
Notes or Capital Notes Redeemable at the relevant Issuer’s Option
Notes or Capital Notes which are redeemable at the option of the relevant Issuer (because of the inclusion of a call option in the
applicable Final Terms, for tax related reasons or as a result of the occurrence of an Accounting Event (in relation to Subordinated
Notes and Capital Notes), a Capital Event (in relation to Subordinated Notes and Capital Notes) or a Regulatory Event (in relation
to Subordinated Notes and Capital Notes) provided in the Final Terms or for other specified reasons) may be redeemed at times
when prevailing interest rates may be lower than the rate borne by such Notes or Capital Notes. As a result, the holders of such
Notes or Capital Notes may not be able to reinvest the redemption proceeds in a comparable security at an interest rate as high as
that of the relevant Notes or Capital Notes. In addition, the relevant Issuer’s ability to redeem such Notes or Capital Notes at its
option is likely to affect the market value of such Notes or Capital Notes. In particular, as the redemption date approaches, the
market value of such Notes generally will not rise substantially above the redemption price because of the optional redemption
feature. Subordinated Notes and Capital Notes contain provisions which allow the Issuer to substitute or vary the terms of such security for Qualifying Securities upon the occurrence of a Capital Event, an Accounting Event, a Regulatory Event or for tax
related reasons as applicable.
Fixed/Floating Rate Notes or Capital Notes
Notes or Capital Notes may bear interest at a rate that the relevant Issuer may elect to convert from a fixed rate to a floating rate,
or from a floating rate to a fixed rate as set out in the applicable Final Terms. The relevant Issuer’s ability to convert the interest
rate will affect the secondary market and the market value of such Notes or Capital Notes. If the relevant Issuer converts from a
fixed rate to a floating rate, the spread on the Fixed/Floating Rate Notes or Capital Notes may be less favourable than then
prevailing spreads on comparable Floating Rate Notes or Capital Notes tied to the same reference rate. In addition, the new
floating rate at any time may be lower than the rates on other Notes or Capital Notes. If the relevant Issuer converts from a
floating rate to a fixed rate, the fixed rate may be lower than the prevailing rates on its Notes or Capital Notes.
• Additional risks related specifically to Capital Notes
ZIC’s obligations under the Capital Notes are deeply subordinated
The rights and claims of the holders of the Capital Notes will be subordinated to the claims of all Senior Creditors (as defined in
Condition 2 of the Terms and Conditions of the Capital Notes), in that the claims of the holders of Capital Notes rank on a
voluntary or involuntary insolvency, winding-up, liquidation, dissolution or other similar proceedings of or against ZIC after the
claims of any Senior Creditors of ZIC, pari passu with the claims of the holders of any subordinated obligations of ZIC which
rank or are expressed to rank pari passu with the claims of the Noteholders and prior to the claims of the holders of all classes of
issued shares in the share capital of ZIC.
Furthermore, the claims of holders of Capital Notes and relative Coupons rank, save as otherwise specified in the applicable Final
Terms, on a voluntary or involuntary insolvency, winding up, liquidation, dissolution or other similar proceedings of or against
ZIC, junior to the claims of holders of any ZIC Subordinated Guarantee.
In the event of a voluntary or involuntary insolvency, winding-up, liquidation, dissolution or other similar proceedings of or
against ZIC, there shall be payable on each Capital Note, subject to the subordination provisions set out above, an amount equal to
the principal amount of each Capital Note with, unless otherwise specified in the applicable Final Terms, unpaid Deferred Interest
(as defined in the Terms and Conditions of the Capital Notes) and interest which has accrued up to, but excluding, the date of
repayment. Although the Capital Notes may pay a higher rate of interest than comparable Notes which are unsubordinated or
which are subordinated but not as deeply subordinated as the Capital Notes, there is a significant risk that an investor in Capital Notes will lose all or some of its investment should ZIC become insolvent.
Deferral or Cancellation of Interest
(A) If a Solvency Event has occurred and is continuing as at the relevant Determination Date (as defined in the Terms and
Conditions of the Capital Notes), then, in relation to any Interest Payment which is otherwise scheduled to be paid on an
Interest Payment Date, ZIC shall (if the applicable Final Terms specifies a Solvency Event as being applicable and the
Capital Note as being Cumulative in relation to a Solvency Event) defer or, (if the applicable Final Terms specifies a
Solvency Event as being applicable and the Capital Note as being Non-Cumulative in relation to a Solvency Event) cancel,
any Interest Payment which is otherwise scheduled to be paid on an Interest Payment Date and shall defer or, as applicable,
cancel the relevant Solvency Shortfall (as defined in the Terms and Conditions of the Capital Notes) if, were ZIC to make
payment of the relevant Interest Payment, a Solvency Event would, as at the date of such payment, occur, in any such case except that ZIC will not be required to defer or, as applicable, cancel such Interest Payment or Solvency Shortfall, as the case
may be, if FINMA or any Successor Authority applicable at the time has consented to such payment.
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(B) If a Trigger Event has occurred and is continuing as at the relevant Determination Date, then, in relation to any Interest
Payment which is otherwise scheduled to be paid on an Interest Payment Date, ZIC shall cancel the amount by which such
Interest Payment exceeds the New Capital Amount per Capital Note outstanding at such time.
If the applicable Final Terms so provide, ZIC may also elect to (if the applicable Final Terms specifies the Capital Note as being
Cumulative with respect to such payment) defer or (if the applicable Final Terms specifies the Capital Note as being Non-
Cumulative with respect to such payment) cancel, in whole or in part, any Interest Payment which is otherwise scheduled to be
paid on an Optional Interest Payment Date by giving notice of such election to the Trustee, the Agent and the holders of the
Capital Notes in accordance with Condition 13 of the Terms and Conditions of the Capital Notes.
In the case where a payment is specified as aforesaid as being Cumulative and the applicable Final Terms specify that Cash Settlement is applicable, ZIC may elect at any time to pay in cash in whole or in part any Deferred Interest. However, any outstanding Deferred Interest will become immediately due and payable in cash in full (or in the case where limb (iv) of the definition of APM Deferred Settlement Date (as defined in the Terms and Conditions of the Capital Notes) is specified as applying as part of the definition of Cash Deferred Settlement Date, on a proportionate basis) upon the Cash Deferred Settlement Date (as defined in the Terms and Conditions of the Capital Notes). Notwithstanding the foregoing, Deferred Interest shall only be due and payable if at the relevant time the prior written approval of FINMA or any Successor Authority to such payment has been given (if such approval is required under Applicable Regulations at the relevant time). In the case where a payment is specified as aforesaid as being Cumulative and the applicable Final Terms specify that APM Settlement is applicable or, as the case may be, applicable to Relevant Solvency Deferred Interest only, ZIC and ZIG may elect at any time to use their commercially reasonable efforts to satisfy in whole or in part any Deferred Interest or, as the case may be, Relevant Solvency Deferred Interest, utilising the APM (as defined in Condition 3(e) of the Capital Notes) and ZIC and ZIG shall use their commercially reasonable efforts to apply the APM to satisfy all (or, in the case where limb (iv) of the definition of APM Deferred Settlement Date applies, on a proportionate basis) of the outstanding Deferred Interest or, as the case may be, Relevant Solvency Deferred Interest, upon the APM Deferred Settlement Date. Notwithstanding the foregoing, ZIC and ZIG will only be obliged to use their commercially reasonable efforts to satisfy any Deferred Interest or, as the case may be, Relevant Solvency Deferred Interest, as aforesaid if at the relevant time the prior written approval of FINMA or any Successor Authority to such payment has been given.
Once ZIC and ZIG have become obliged to use their respective commercially reasonable efforts to operate the APM to settle any
Deferred Interest or, as the case may be, Relevant Solvency Deferred Interest, ZIC and ZIG must continue to use their respective
commercially reasonable efforts to raise sufficient proceeds from the operation of the APM for certain specified time periods
following the relevant APM Deferred Settlement Date to the extent permitted under prevailing applicable regulatory criteria governing the Capital Notes. If, and to the extent that ZIC and/or ZIG have not issued Qualifying APM Securities within such
time period outlined above, ZIC’s obligation with respect to such Deferred Interest or, as the case may be, Relevant Solvency
Deferred Interest, will be cancelled. In any case, Deferred Interest or, as the case may be, Relevant Solvency Deferred Interest,
that has not been settled within the period of time specified in the Final Terms of any deferral will be cancelled.
Use of the APM to satisfy Deferred Interest may be subject to restrictions
Upon ZIC and ZIG becoming obliged to use their commercially reasonable efforts to settle Deferred Interest using the APM
pursuant to Condition 3(e), ZIC and ZIG will use their commercially reasonable efforts to satisfy such Deferred Interest by way of
Ordinary Share Settlement (as determined in the Terms and Conditions of the Capital Notes).
Subject as provided in Condition 3(e) of the Terms and Conditions of the Capital Notes, ZIC may only utilise the Ordinary Share
Settlement to the extent that the number of Payment Shares (as defined in the Terms and Conditions of the Capital Notes) used for
the purpose of the APM in any 12-month period does not exceed 2 per cent of ZIG’s outstanding share capital.
Perpetual Securities ZIC is under no obligation to redeem the Undated Capital Notes at any time and the holders of Undated Capital Notes have no right to call for their redemption. Redemption of Dated Capital Notes on their Maturity Date is subject to no Solvency Event occurring on the Maturity Date, as more fully explained in Condition 6(a). Redemption, Exchange Risk and Substitution The Capital Notes may, subject as provided in Condition 6 of the Capital Notes, be redeemed by ZIC at their Optional Redemption Amount together with any interest accrued to (but excluding) the relevant Optional Redemption Date and, if the Capital Notes are expressed to be Cumulative with respect to such payment (but not otherwise) any Deferred Interest which will be satisfied by operation of Condition 3(e) of the Terms and Conditions of the Capital Notes. In addition, the Capital Notes may be redeemed (i) for tax reasons or, if so specified in the applicable Final Terms, (ii) upon the occurrence of any of an Accounting Event, a Capital Event or a Regulatory Event prior to the first Optional Redemption Date in whole but not in part at any time.
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Upon the occurrence of the events in either of (i) or, if so specified in the applicable Final Terms, (ii) above, the Capital Notes may be substituted for, or their terms varied so that they remain, Qualifying Securities. No limitation on issuing senior or pari passu securities There is no restriction on the amount of securities which ZIC or any other member of the Zurich Insurance Group may issue and which may rank senior to, or pari passu with, the respective Capital Notes. The issue of any such securities may reduce the amount recoverable by holders of Capital Notes on a winding-up of ZIC and/or may increase the likelihood of a deferral of payments under the Capital Notes.
• Risks related to the market generally
An active trading market may not develop for the Notes or Capital Notes The Notes or Capital Notes are a new issue of securities for which there is no trading market and one may never develop. If such a market were to develop, the Notes or Capital Notes could trade at prices which may be higher or lower than the initial offering price. Notes or Capital Notes issued with specific investment objectives or strategies will have a more limited trading market and may experience more price volatility. Prospective investors should be aware that, at the time they wish to sell their Notes or Capital Notes, there may be few or no investors willing to buy the Notes or Capital Notes. Exchange rates and exchange controls Notes or Capital Notes and/or coupon payments can be denominated in, or the payment of which is to be or may be made in or related to the value of, a currency or composite currency and significant risks are entailed if such currency is other than the currency in which the prospective investor’s financial activities are denominated. Such risks include the possibility of significant changes in the currency exchange rates and the risk of imposition or modification of foreign exchange controls by the relevant government. Depreciation of the currency in which a Note or Capital Note is denominated would result in a decrease in the effective yield of such Note or Capital Note and, in certain circumstances, could result in a loss to the investor. Governments have imposed from time to time, and may in the future impose, exchange controls which could affect exchange rates as well as the availability of a specified foreign currency at the time of payment of principal of, and premium, if any, or interest, if any, on a Note or Capital Note. Interest rate risks Investment in Fixed Rate Notes or Fixed Rate Capital Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Fixed Rate Notes or Capital Notes. Credit ratings may not reflect all risks One or more independent credit rating agencies may assign credit ratings to the Notes or Capital Notes. The ratings may not reflect the potential impact of all risks related to structure, market and other factors which may affect the value of the Notes or Capital Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. Tax consequences of holding the Notes or Capital Notes Potential investors should consider the tax consequences of investing in the Notes or Capital Notes and consult their tax advisers about their own tax situation.
• Risks related to the Notes or Capital Notes generally Set out below is a brief description of certain risks relating to the Notes or Capital Notes generally: Modification The conditions of the Notes and the Capital Notes contain provisions for calling meetings of holders of Notes and Capital Notes to consider matters affecting their interests generally, including the modification of certain terms and conditions of the Notes. These provisions permit defined majorities to bind all holders of Notes and Capital Notes including holders of Notes and Capital Notes who did not attend or vote at the relevant meeting and holders of Notes and Capital Notes who voted in a manner contrary to the majority.
EU Savings Directive
Under EC Council Directive 2003/48/EC (the “EU Savings Directive”) on the taxation of savings income, each EU Member State is required, to provide to the tax authorities of another EU Member State details of payments of interest or other similar income
paid by a person established within its jurisdiction to, or secured by such a person for the benefit of, an individual resident or
certain limited types of entity established in that other EU Member State; however, for a transitional period, Austria and
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Luxembourg are instead required (unless during such period they elect otherwise) to apply a withholding system in relation to
such payments, deducting tax at the rate of 35 per cent pursuant to the EU Savings Directive or any other Directive implementing
the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law
implementing or complying with, or, introduced in order to conform to, such Directive. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non EU countries to the exchange of information relating to
such payments.
Also a number of non-EU countries, including Switzerland, and certain dependent or associated territories of certain EU Member
States, have adopted similar measures to the EU Savings Directive (either provision of information or transitional withholding and
in the case of Switzerland, a withholding system with the option of the individual to have the paying agent and Switzerland
provide to the tax authorities of the EU Member State the details of the interest payments in lieu of the withholding) in relation to
payments made by a person established within its jurisdiction to, or secured by such a person for the benefit of, an individual
resident or certain limited types of entity established in an EU Member State. In addition, the EU Member States have entered into
provision of information or transitional withholding arrangements with certain of those dependent or associated territories in
relation to payments made by a person in an EU Member State to, or secured by such a person for the benefit of, an individual resident or certain limited types of entity established in one of those territories.
If a payment were to be made or collected through an EU Member State, or a non-EU country or territory, which has opted for a
withholding system, including Switzerland, and an amount of, or in respect of, tax were to be withheld from that payment then, in
accordance with Condition 7 of the relevant Conditions, neither the relevant Issuer nor any Paying Agent nor any other person
would be obliged to pay additional amounts with respect to any Note or Capital Note as a result of the imposition of such
withholding tax. The relevant Issuer and the Guarantor undertake at Condition 11 of the relevant Conditions that they will ensure
that they maintain a Paying Agent in an EU Member State that will not be obliged to withhold or deduct tax pursuant to the EU
Savings Directive or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000
or any law implementing or complying with, or introduced to conform to, such Directive, which may mitigate an element of this
risk if the Noteholder is able to arrange for payment through such a Paying Agent.
The European Council formally adopted a Council Directive amending the EU Savings Directive on 24 March 2014 (the
"Amending Directive"). The Amending Directive amends and broadens the scope of the requirements described above. EU
Member States have until 1 January 2016 to adopt the national legislation necessary to comply with the Amending Directive,
which legislation must apply from 1 January 2017. The changes made under the Amending Directive include expanding the range
of payments covered by the EU Savings Directive and extending the scope of the EU Savings Directive to payments made to, or
secured for the benefit of, certain other entities and legal arrangements. Luxembourg confirmed that they will endorse the
amendment to the EU Savings Directive and will provide the required information on interest payments to the tax authorities of
other EU Member States under the automatic information exchange as of 1 January 2015 and will abolish the withholding system.
Switzerland and the European Commission have commenced negotiations on certain amendments to the agreement between the
European Community and the Confederation of Switzerland dated as of 26 October 2004 providing for measures equivalent to those laid down in the EU Savings Directive, which may, if implemented, amend or broaden the scope of the requirements
discussed above.
Investors should inform themselves of, and where appropriate take advice on, the impact of the EU Savings Directive, as
amended, on their investment.
Payment of additional amounts for Swiss withholding taxes may be null and void.
Although the terms of the Notes and the Capital Notes provide that, in the event of any withholding or deduction on account of
Swiss tax being required by Swiss law, the Issuer or the Guarantor, as the case may be, shall, subject to certain exceptions, pay
additional amounts or, in the case of Capital Notes, interest at a recalculated rate, so that the net amount received by the holders of
the Notes shall equal the amount which would have been received by such holder in the absence of such withholding or deduction, such obligation may contravene Swiss legislation and be null and void and not enforceable in Switzerland.
Proposed Amendment of the Swiss Withholding Tax Act On 24 August 2011, the Swiss Federal Council issued draft legislation, which, if enacted, may require a paying agent in Switzerland to deduct Swiss withholding tax at a rate of 35 per cent on any payment of interest in respect of a Note or a Capital Note (including, as the case may be, payment under the Guarantee) to an individual resident in Switzerland or to any person (not only individual) resident outside Switzerland. If this legislation or similar legislation were enacted and an amount of, or in respect of, Swiss withholding tax were to be deducted or withheld from that payment, neither the Issuer nor the Guarantor nor any paying agent nor any other person would, pursuant to the Conditions, be obliged to pay additional amounts with respect to any Note or a Capital Note, or interest at a recalculated rate in respect of a Capital Note, as a result of the deduction or imposition of such withholding tax.
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Final Foreign Withholding Taxes in Switzerland On 1 January 2013, treaties on final withholding taxes of Switzerland with the United Kingdom and Austria entered into force
(each a “Contracting State”). The treaties require a Swiss paying agent, as defined in the treaties, to levy a flat-rate final
withholding tax (Abgeltungssteuer) at rates specified in the treaties on certain capital gains and income items (interest, dividends,
other income items, all as defined in the treaties) deriving from assets, including the Notes or the Capital Notes or the Guarantee,
as applicable, held in accounts or deposits with a Swiss paying agent by (i) an individual resident in a Contracting State or, (ii) if
certain requirements are met, by a domiciliary company (Sitzgesellschaft), an insurance company in connection with a so-called
insurance wrapper (Lebensversicherungsmantel) or other individuals if the beneficial owner is an individual resident in a
Contracting State. The flat-rate tax withheld substitutes the ordinary income tax on the respective capital gains and income items, in the Contracting State where the individual is tax resident. In order to avoid the withholding of the flat-rate tax by the Swiss
paying agent, such individuals may opt for a disclosure of the respective capital gains and income items to the tax authorities of
the Contracting State where they are tax residents. Switzerland may conclude similar treaties with other European countries. If an
amount of, or in respect of, such final withholding tax were to be deducted or withheld from a payment, neither the relevant
Issuer, nor the Guarantor nor a paying agent nor any other person would pursuant to the Terms and Conditions of the Notes or the
Capital Notes or the Guarantee be obliged to pay additional amounts with respect to any Notes or Capital Note, or interest at a
recalculated rate in respect of a Capital Note, as a result of the deduction or imposition of such final withholding tax.
The proposed financial transaction tax (“FTT”)
The European Commission has published a proposal for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “participating Member States”).
The proposed FTT has very broad scope and could, if introduced in its current form, apply to certain dealings in financial
instruments (including secondary market transactions) in certain circumstances. Primary market transactions referred to in Article
5(c) of Regulation (EC) No 1287/2006 are exempt.
Under the current European Commission proposal, the FTT could apply in certain circumstances to persons both within and
outside of the participating Member States. Generally, it would apply to certain dealings in financial instruments where at least
one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may
be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (i) by
transacting with a person established in a participating Member State or (ii) where the financial instrument which is subject to the
dealings is issued in a participating Member State.
The FTT proposal remains subject to negotiation between the participating Member States. It may therefore be altered prior to
any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate. Prospective
holders of Notes are advised to seek their own professional advice in relation to the FTT.
Applicable Law The conditions of the Notes and the Capital Notes are governed by English law in effect as of the date of this Base Prospectus, save that the provisions relating to subordination in Notes which are Subordinated Notes will be governed by the law of the jurisdiction of incorporation of the Issuer of such Subordinated Notes and the provisions relating to subordination in the Capital Notes will be governed by the laws of Switzerland. The Guarantees by ZIC are governed by Swiss law and accordingly any dispute arising out of the Guarantees between the Guarantor and the Trustee, or the Guarantor and a Holder who is entitled to proceed against the Guarantor, shall fall exclusively within the courts of the City of Zurich, venue Zurich 1. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice or Swiss law or administrative practice, respectively, after the date of this Base Prospectus. Denomination (secondary trading) Although Notes or Capital Notes which are admitted to trading on a regulated market in the European Economic Area or offered to the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive are required to have a minimum denomination of EUR 100,000 (or where the specified currency is not euro, its equivalent in the specified currency), or an integral multiple of EUR 1,000 (or where the specified currency is not euro, its equivalent in the specified currency) in excess thereof, it is possible that the Notes or Capital Notes may be traded in the clearing systems in amounts in excess of EUR 100,000 (or its equivalent) or an integral multiple of EUR 1,000 (or its equivalent) in excess thereof that are not integral multiples of EUR 100,000 (or its equivalent) or an integral multiple of EUR 1,000 (or its equivalent) in excess thereof. In such a case, should definitive Notes or Capital Notes be required to be printed, a holder who does not have an integral multiple of EUR 100,000 (or its equivalent) or an integral multiple of EUR 1,000 (or its equivalent) in excess thereof in his account with the relevant clearing system at the relevant time may not receive all of his entitlement in the form of definitive Notes or Capital Notes unless and until such time as his holding becomes an integral multiple of EUR 100,000 (or its equivalent) or an integral multiple of EUR 1,000 (or its equivalent) in excess thereof.
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INFORMATION INCORPORATED BY REFERENCE
The information contained in the following documents, which have been filed with the CSSF and published and are available for
viewing on the website of the Luxembourg Stock Exchange (www.bourse.lu), all in accordance with the Prospectus Directive, is
incorporated by reference in, and forms part of, this Base Prospectus:
(a) (i) the audited consolidated financial statements (including the auditors’ report thereon and notes thereto) of ZIC and its
subsidiaries (collectively the “ZIC Group”) (formerly known as Zurich Insurance Group) in respect of the years ended 2013
and 2012 (the consolidated income statements being set out on page 55 and page 53 respectively, of its 2013 and 2012
annual reports; the consolidated statements of comprehensive income being set out on pages 56 to 57 and 54 to 55
respectively, of its 2013 and 2012 annual reports; the consolidated balance sheets being set out on pages 58 to 59 and 56 to
57 respectively, of its 2013 and 2012 annual reports; the consolidated statements of cash flows being set out on pages 60 to
61 and 58 to 59 respectively, of its 2013 and 2012 annual reports; the consolidated statements of changes in equity being set
out on pages 62 to 63 and 60 to 61 respectively, of its 2013 and 2012 annual reports; the notes to the financial statements
being set out on pages 64 to 163 and 62 to 165 respectively, of its 2013 and 2012 annual reports; and the auditors’ report
being set out on pages 164 to 165 and 166 to 167 respectively, of its 2013 and 2012 annual reports); and
(ii) the audited financial statements (including the auditors’ report thereon and notes thereto) of ZIC, as included in the
annual report mentioned in (i) above, in respect of the years ended 2013 and 2012 (the income statements being set out on
page 169 and 171 respectively, of the 2013 and 2012 annual reports; the balance sheets being set out on pages 170 to 171
and 172 to 173 respectively, of the 2013 and 2012 annual reports; the notes to the financial statements being set out on pages
172 to 183 and 174 to 183 respectively, of the 2013 and 2012 annual reports; and the auditors’ report being set out on pages
184 to 185 of each of the 2013 and 2012 annual reports).
(b) the audited financial statements (including the auditors’ report thereon and notes thereto) of ZF (UK) in respect of the years
ended 2013 and 2012 (the auditors’ report being set out on pages 4 to 5 and page 3 respectively, of its 2013 and 2012 annual
reports; the profit and loss accounts being set out on pages 6 and 4 respectively, of its 2013 and 2012 annual reports; the
balance sheets being set out on pages 7 and 5 respectively, of its 2013 and 2012 annual reports; and the notes to the financial statements being set out on pages 8 to 15 and 6 to 14 respectively, of the 2013 and 2012 annual reports).
(c) the audited financial statements (including the auditors’ report thereon and notes thereto) of ZF (Luxembourg) in respect of
the years ended 2013 and 2012 (the auditors’ report being set out on pages 4 to 5 of each of its 2013 and 2012 annual
reports; the balance sheets being set out on pages 6 to 10 and 6 to 9 respectively, of its 2013 and 2012 annual reports; the
profit and loss accounts being set out on pages 11 to 13 and 10 to 11 respectively, of its 2013 and 2012 annual reports; and
the notes to the financial statements being set out on pages 14 to 22 and 12 to 19 respectively, of its 2013 and 2012 annual
reports).
(d) the terms and conditions set out on pages 32 to 67 (inclusive) and 68 to 102 (inclusive) of the base prospectus dated 15 May
2012 that was published in connection with the Programme under the headings “Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes” and “Terms and Conditions of the Capital Notes” respectively.
(e) the terms and conditions set out on pages 31 to 62 (inclusive) and 63 to 96 (inclusive) of the base prospectus dated 17 May
2013 that was published in connection with the Programme under the headings “Terms and Conditions of the Senior Notes,
Dated Subordinated Notes and Undated Subordinated Notes” and “Terms and Conditions of the Capital Notes” respectively.
None of the Issuers is subject to the reporting requirements of the United States Securities Exchange Act of 1934, as amended (the
“U.S. Exchange Act”).
Each Issuer will provide, without charge, to each person to whom a copy of this Base Prospectus has been delivered, upon the
request of such person, a copy of any or all of the documents containing information incorporated herein by reference. Requests
for such documents should be directed to the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) at their respective offices set out at the end of this Base Prospectus. In addition, such documents will be available free of charge from the principal
office of the listing agent being Banque Internationale à Luxembourg (formerly Dexia Banque Internationale à Luxembourg S.A.)
(the “Luxembourg Listing Agent”) for Notes listed on the Official List and traded on the regulated market of the Luxembourg
Stock Exchange.
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Information Source Information incorporated by reference of the ZIC Group
Consolidated Income Statement for the year ended 31 December 2013 ................................. 2013 Annual Report page 55
Consolidated Income Statement for the year ended 31 December 2012 ................................. 2012 Annual Report page 53
Consolidated Statements of Comprehensive Income for the year ended 31 December
2013………………………………………………………………………………………… 2013 Annual Report pages 56-57
Consolidated Statements of Comprehensive Income for the year ended 31 December
2012…………………………………………………………………………………………. 2012 Annual Report pages 54-55
Consolidated Balance Sheet as at 31 December 2013............................................................... 2013 Annual Report pages 58-59
Consolidated Balance Sheet as at 31 December 2012............................................................... 2012 Annual Report pages 56-57
Consolidated Statement of Cash Flows for the year ended 31 December 2013 ...................... 2013 Annual Report pages 60-61
Consolidated Statement of Cash Flows for the year ended 31 December 2012 ...................... 2012 Annual Report pages 58-59
Consolidated Statement of Changes in Equity for the year ended 31 December 2013........... 2013 Annual Report pages 62-63
Consolidated Statement of Changes in Equity for the year ended 31 December 2012........... 2012 Annual Report pages 60-61
Notes to the financial statements for the year ended 31 December 2013 ................................ 2013 Annual Report pages 64-163
Notes to the financial statements for the year ended 31 December 2012 ................................ 2012 Annual Report pages 62-165
Auditor’s report for the year ended 31 December 2013 ............................................................ 2013 Annual Report pages 164-165
Auditor’s report for the year ended 31 December 2012 ............................................................ 2012 Annual Report pages 166-167
Information incorporated by reference of Zurich Insurance Company Ltd
Income Statement for the year ended 31 December 2013 ........................................................ 2013 Annual Report page 169
Income Statement for the year ended 31 December 2012 ........................................................ 2012 Annual Report page 171
Balance Sheet as at 31 December 2013...................................................................................... 2013 Annual Report pages 170-171
Balance Sheet as at 31 December 2012...................................................................................... 2012 Annual Report pages 172-173
Notes to the financial statements for the year ended 31 December 2013 ................................ 2013 Annual Report pages 172-183
Notes to the financial statements for the year ended 31 December 2012 ................................ 2012 Annual Report pages 174-183
Auditor’s report for the year ended 31 December 2013 ............................................................ 2013 Annual Report pages 184-185
Auditor’s report for the year ended 31 December 2012 ............................................................ 2012 Annual Report pages 184-185
Information incorporated by reference of Zurich Finance (UK) plc
Auditor’s report for the year ended 31 December 2013 ............................................................ 2013 Annual Report pages 4-5
Auditor’s report for the year ended 31 December 2012 ............................................................ 2012 Annual Report page 3
Profit and Loss Accounts for the year ended 31 December 2013 ............................................ 2013 Annual Report page 6
Profit and Loss Accounts for the year ended 31 December 2012 ............................................ 2012 Annual Report page 4
Balance Sheet as at 31 December 2013...................................................................................... 2013 Annual Report page 7
Balance Sheet as at 31 December 2012...................................................................................... 2012 Annual Report page 5
Notes to the financial statements for the year ended 31 December 2013 ................................ 2013 Annual Report pages 8-15
Notes to the financial statements for the year ended 31 December 2012 ................................ 2012 Annual Report pages 6-14
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Information incorporated by reference of Zurich Finance (Luxembourg) S.A.
Auditor’s report for the year ended 31 December 2013 ............................................................ 2013 Annual Report pages 4-5
Auditor’s report for the year ended 31 December 2012 ............................................................ 2012 Annual Report pages 4-5
Balance Sheet as at 31 December 2013...................................................................................... 2013 Annual Report pages 6-10
Balance Sheet as at 31 December 2012...................................................................................... 2012 Annual Report page 6-9
Profit and Loss Accounts for the year ended 31 December 2013 ............................................ 2013 Annual Report pages 11-13
Profit and Loss Accounts for the year ended 31 December 2012 ............................................ 2012 Annual Report page 10-11
Notes to the financial statements for the year ended 31 December 2013 ................................ 2013 Annual Report pages 14-22
Notes to the financial statements for the year ended 31 December 2012 ................................ 2012 Annual Report pages 12-19
Information incorporated by reference from 2012 Zurich EMTN Base Prospectus
Terms and Conditions of the Senior Notes, Dated Subordinated Notes and
Undated Subordinated Notes ………………………………………………......
2012 Zurich EMTN Base Prospectus pages 32-67
Terms and Conditions of the Capital Notes …………………........................... 2012 Zurich EMTN Base Prospectus pages 68-102
Information incorporated by reference from 2013 Zurich EMTN Base Prospectus
Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes ………………………………………………......
2013 Zurich EMTN Base Prospectus pages 31-62
Terms and Conditions of the Capital Notes …………………........................... 2013 Zurich EMTN Base Prospectus pages 63-96
____________
Each Issuer and ZIC (where ZIC is not the relevant Issuer) will, in connection with the listing on the Official List and trading of the Notes on the regulated market of the Luxembourg Stock Exchange so long as any Note remains outstanding and listed and
traded on such exchange, in the event of any material adverse change in the financial condition of such Issuer or ZIC (where ZIC
is not the relevant Issuer) which is not reflected in this Base Prospectus, prepare a supplement to this Base Prospectus (to be
approved by the CSSF) in respect of the Notes issued by that Issuer or ZIC (where ZIC is not the relevant Issuer) to be listed on
the Official List and traded on the regulated market of the Luxembourg Stock Exchange.
This Base Prospectus applies to issues of Notes made on and after 19 May 2014. If the terms of the Programme are modified in a
manner which would make this Base Prospectus, as supplemented, inaccurate or misleading, a new Base Prospectus will be
prepared in replacement for this Base Prospectus.
The information incorporated by reference that is not included in the cross-reference list, is considered as additional information
and is not required by the relevant schedules of the Prospectus Regulation.
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GENERAL DESCRIPTION OF THE PROGRAMME
The following general description does not purport to be complete and is taken from, and is, together with the information under “Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes” or “Terms and Conditions of the Capital Notes” below qualified in its entirety by, the remainder of this Base Prospectus and, in relation to the
terms and conditions of any particular Tranche of Notes, the applicable Final Terms and must be read together with the
documentation referred to under the heading “Documents Incorporated by Reference” which is available for inspection.
Words and expressions defined under “Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated
Subordinated Notes” or “Terms and Conditions of the Capital Notes” below or elsewhere in this Base Prospectus have the same meanings in this general description. References herein to the “relevant Conditions” means the Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes or, as the case may be, the Terms and Conditions of the Capital Notes.
Dealers: Barclays Bank PLC
BNP PARIBAS Citigroup Global Markets Limited
Commerzbank Aktiengesellschaft
Crédit Agricole Corporate and Investment Bank
Credit Suisse Securities (Europe) Limited
Deutsche Bank AG, London Branch
Goldman Sachs International
HSBC Bank plc
J.P. Morgan Securities plc
Merrill Lynch International
Morgan Stanley & Co. International plc
The Royal Bank of Scotland plc
UBS Limited
Each issue of Notes denominated in a currency in respect of which particular laws,
guidelines, regulations, restrictions or reporting requirements apply will only be
issued in circumstances which comply with such laws, guidelines, regulations,
restrictions or reporting requirements from time to time (see “Subscription and Sale”).
Agent: Citibank, N.A.
Luxembourg Listing Agent: Banque Internationale à Luxembourg
Size: USD 18,000,000,000 (or its equivalent in other currencies) outstanding at any
time. The Issuers may increase the amount of the Programme in accordance with
the terms of the Dealer Agreement.
Distribution: Notes may be distributed by way of private placement or public offering and in
each case on a syndicated or non-syndicated basis.
Currencies: Subject to any applicable legal or regulatory restrictions, such currencies as may be
agreed between the relevant Issuer, the relevant Dealer and the Trustee, including,
without limitation, Australian Dollars, Canadian Dollars, Czech Koruna, Danish
Kroner, Euro, Hong Kong Dollars, Japanese Yen, New Zealand Dollars,
Norwegian Krone, Sterling, South African Rand, Swedish Krona, Swiss Francs
and United States Dollars (as indicated in the applicable Final Terms, the
“Specified Currency”).
Maturities: Such maturities as may be agreed between the relevant Issuer and the relevant
Dealer(s) and as indicated in the applicable Final Terms, subject to such minimum
or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to
the relevant Issuer or the relevant Specified Currency. The Issuers may issue
Undated Subordinated Notes (subject as aforesaid) without a specified maturity.
ZIC may issue Capital Notes without a specified maturity.
Where Notes have a maturity of less than one year and either (a) the issue proceeds
are received by the relevant Issuer in the United Kingdom or (b) the activity of
issuing the Notes is carried on from an establishment maintained by the relevant
Issuer in the United Kingdom, such Notes must: (i) have a minimum redemption
value of £100,000 (or its equivalent in other currencies) and be issued only to
persons whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their businesses
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or who it is reasonable to expect will acquire, hold, manage or dispose of
investments (as principal or agent) for the purposes of their businesses; or (ii) be
issued in other circumstances which do not constitute a contravention of section 19
of the Financial Services and Markets Act 2000 (“FSMA”) by the relevant Issuer.
Issue Price: Notes may be issued on a fully paid basis and at an issue price which is at par or at
a discount to, or premium over, par.
Form of Notes: Notes will be issued in bearer form or registered form as described in “Form of the
Notes and the Capital Notes” below. Each Bearer Global Note (other than a Listed
Swiss Franc Note) which is not intended to be issued in NGN form and each
Registered Global Note which is not intended to be held under the NSS, each as
specified in the relevant Final Terms, will be deposited on or around the relevant
issue date with the Common Depositary for Euroclear or Clearstream,
Luxembourg and each Bearer Global Note (other than a Listed Swiss Franc Note)
which is intended to be issued in NGN form and each Registered Global Note
which is intended to be held under the NSS, each as specified in the relevant Final Terms, will be deposited on or around the relevant issue date with the Common
Safekeeper for Euroclear and Clearstream, Luxembourg. Subordinated Notes and
Capital Notes will not be issued in NGN form. Listed Swiss Franc Notes will be
represented by a Permanent Global SIS Note exchangeable for definitive Notes in
the circumstances set out therein and holders of such Notes will not have the right
to effect or demand the conversion of the Permanent Global SIS Notes
representing such Listed Swiss Franc Notes into, or delivery of, Notes in definitive
or uncertificated form. Each Listed Swiss Franc Note which is not intended to be
issued in new global note form (a “Classic Global Note” or “CGN”), as specified
in the relevant Final Terms, will be delivered through SIX SIS AG (“SIS”) or such
other intermediary in Switzerland recognised for such purposes by the SIX Swiss
Exchange Ltd. (“SIX Swiss Exchange”) on or prior to the original issue date of such Tranche, and each Listed Swiss Franc Note which is intended to be issued in
NGN form, as specified in the relevant Final Terms, will be deposited on or around
the relevant issue date with a common safekeeper for SIS or such other
intermediary.
Fixed Rate Notes: Fixed interest will be payable on such date or dates as may be agreed between the
relevant Issuer and the relevant Dealer (as indicated in the applicable Final Terms)
and on redemption. Fixed Rate Notes may include Notes which pay interest by
reference to a Specified Mid Swap Rate.
Floating Rate Notes: Floating Rate Notes will bear interest at a rate determined:
(i) on the same basis as the floating rates under a notional interest rate swap
transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions (as published by the International
Swaps and Derivatives Association Inc.); or
(ii) on the basis of a reference rate appearing on the agreed screen page of a
commercial quotation service; or
(iii) on such other basis as may be agreed between the relevant Issuer and the
relevant Dealer, as indicated in the applicable Final Terms.
The Margin (if any) relating to such floating rate will be agreed between the
relevant Issuer and the relevant Dealer for each Series of Floating Rate Notes and
specified in the applicable Final Terms.
Other provisions in relation to Floating Rate Notes:
Floating Rate Notes may also have a maximum interest rate, a minimum interest
rate or both (as indicated in the applicable Final Terms).
Interest on Floating Rate Notes in respect of each Interest Period, as selected prior to issue by the relevant Issuer and the relevant Dealer, will be payable on the
Interest Payment Dates specified in, or determined pursuant to, the applicable Final
Terms and will be calculated on the relevant Day Count Fraction unless otherwise
indicated in the applicable Final Terms.
Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount to their nominal amount
and will not bear interest.
Special provisions in relation to interest payable under Subordinated Notes:
Interest shall be payable on Subordinated Notes on such date or dates as may be
agreed with the relevant Dealer (as indicated in the applicable Final Terms),
subject to the provisions relating to the optional deferral of interest payments or
Solvency Deferral set out under Condition 4 of the Terms and Conditions of the
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Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes.
Special provisions in relation to interest payable under Capital Notes:
Interest shall be payable on the Capital Notes on such date or dates as may be
agreed with the relevant Dealer (as indicated in the applicable Final Terms),
subject to the provisions relating to the optional or mandatory deferral or, as applicable, cancellation of interest payments set out in Condition 3 of the Terms
and Conditions of the Capital Notes.
ZIC shall (if the applicable Final Terms specifies the Capital Note as being
Cumulative with respect to such payment) defer or (if the applicable Final Terms
specifies the Capital Note as being Non-Cumulative with respect to such payment)
cancel any Interest Payment (or relevant part thereof as described herein) on the
Capital Notes if a Solvency Event is specified in the applicable Final Terms as
applicable and has occurred and is continuing.
ZIC shall also cancel any Interest Payment (or relevant part thereof as described
herein) on the Capital Notes if a Trigger Event is specified in the applicable Final
Terms as applicable and has occurred and is continuing.
In addition, ZIC may elect (if the applicable Final Terms provides for such election
and specifies the Capital Note as being Cumulative with respect to such payment)
to defer or (if the applicable Final Terms provides for such election and specifies
the Capital Note as being Non-Cumulative with respect to such payment) to cancel
such Interest Payment on the Capital Notes by giving notice of such election to the
Trustee, the Agent and the Noteholders in accordance with the Terms and
Conditions of the Capital Notes.
If an Interest Payment has not been paid in full by reason of any of the above then,
in the case of Capital Notes specified as Cumulative with respect to such interest
payment, for so long as such payment remains unpaid and, in the case of Capital
Notes specified as Non-Cumulative with respect to such interest payment, until the
next payment of an Interest Payment in full, (if the applicable Final Terms so provide), ZIC, ZIG and their subsidiaries will be subject to the restrictions on
making certain payments described in Condition 3(d) of the Terms and Conditions
of the Capital Notes.
Settlement of Deferred Interest — Capital Notes:
The Issuer may, if the applicable Final Terms specify that Cash Settlement is applicable, elect to pay in cash in whole or in part any Deferred Interest pursuant to Condition 3(e). The Issuer and ZIG may elect, and shall in specified circumstances be required, to settle Deferred Interest utilising the APM in accordance with Condition 3(e) of the Terms and Conditions of the Capital Notes.
Redemption of the Senior Notes and Subordinated Notes:
The applicable Final Terms will indicate either that the relevant Notes cannot be redeemed prior (in the case of Senior Notes and Dated Subordinated Notes) to their stated maturity or that such Notes and Undated Subordinated Notes will be redeemable at the option of the relevant Issuer and/or the Noteholders upon giving the notice required by the applicable Final Terms to the Noteholders or the relevant Issuer as the case may be, on a date or dates specified, at a price or prices and on such terms as are indicated in the applicable Final Terms and, where applicable pursuant to Condition 6 in the case of Subordinated Notes, having obtained the prior written approval of FINMA or any successor Authority for such payment. Furthermore, Subordinated Notes may be redeemed (i) for taxation reasons or (ii) if so specified in the applicable Final Terms, if an Accounting Event, a Capital Event or a Regulatory Event, has occurred. Upon the occurrence of any of the events described in (i) or, if so specified in the applicable Final Terms, (ii) above, the relevant Issuer may at any time either substitute all (but not some only) of the Subordinated Notes for, or vary the terms of the Subordinated Notes so that they remain or, as appropriate, become, Qualifying Securities.
The Optional Redemption Amount payable in respect of any Note of the Specified Denomination on any Optional Redemption Date and, except in the case of Undated Subordinated Notes, the Final Redemption Amount payable in respect of any Note of the Specified Denomination on any Maturity Date (subject to the occurrence of a Solvency Event which has occurred and is continuing on the Maturity Date or which would occur as a result of the relevant redemption) will in all circumstances be an amount equal to or greater than the Specified Denomination of such Note.
Redemption of the Capital Notes: The Capital Notes are either Dated Capital Notes or Undated Capital Notes. Undated Capital Notes are perpetual securities in respect of which there is no fixed maturity date and they are redeemable or repayable only in accordance with the provisions of Conditions 6 and 9 of the Terms and Conditions of the Capital Notes. In all cases, ZIC may only redeem, substitute or vary the Capital Notes if FINMA
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has given and has not subsequently withdrawn its consent to the redemption, substitution or variation as appropriate, to the extent that such consent is required. The Dated Capital Notes may be redeemed upon maturity provided that, if so specified in the applicable Final Terms, if a Solvency Event has occurred and is continuing on the Maturity Date or would occur as a result of the relevant redemption, the Dated Capital Notes shall not be redeemed, unless the prior written approval of FINMA or any Successor Authority for such payment has been given. Furthermore, the Capital Notes may be redeemed (i) for taxation reasons or (ii), if so specified in the applicable Final Terms, on the occurrence of any of an Accounting Event, a Capital Event or a Regulatory Event pursuant to Condition 6.
Upon the occurrence of any of the events described in (i) or, if so specified in the applicable Final Terms, (ii) above, ZIC may at any time either substitute all (but not some only) of the Capital Notes for, or vary the terms of the Capital Notes so that they remain or, as appropriate, become, Qualifying Securities.
The Capital Notes may also be redeemed by the Issuer on any Optional Redemption Date in whole or in part at the Optional Redemption Amounts specified in the applicable Final Terms, in accordance with Condition 6(d) of the Terms and Conditions of the Capital Notes.
The Optional Redemption Amount payable in respect of any Note of the Specified Denomination on any Optional Redemption Date and, in the case of Dated Capital Notes, the Final Redemption Amount payable in respect of any Note of the Specified Denomination upon the Maturity Date of such Dated Capital Notes (subject to the occurrence of a Solvency Event which has occurred and is continuing on the Maturity Date or which would occur as a result of the relevant redemption) will in all circumstances be an amount equal to or greater than the Specified Denomination of such Note.
Denomination of Notes: Notes issued under the Programme which may be listed on the Official List and admitted to trading on the regulated market of the Luxembourg Stock Exchange and/or admitted to listing, trading and/or quotation by any other listing authority, stock exchange and/or quotation system situated or operating in a Member State may not (a) have a minimum denomination of less than EUR 100,000 (or its equivalent in another currency), or (b) carry the right to acquire shares (or transferable securities equivalent to shares) issued by ZF (Luxembourg), ZF (UK), ZIC or by any entity to whose group ZF (Luxembourg), ZF (UK) or ZIC belong.
Subject thereto, Notes will be issued in such denominations as may be agreed
between the relevant Issuer and the relevant Dealer as indicated in the applicable
Final Terms save that the minimum denomination of each Note will be such as
may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified
Currency.
If so specified in the Final Terms, so long as the Notes are represented by a
Temporary Global Note or Permanent Global Note, the Notes may be tradeable
only in minimum specified denominations of EUR 100,000 (or equivalent in
another currency) and integral multiples of EUR 1,000 (or equivalent in another
currency) in excess thereof.
Notes issued under the Programme may have a minimum specified denomination
of less than EUR 100,000 if it is the intention that the Notes will not be listed on
the Official List and admitted to trading on the regulated market of the
Luxembourg Stock Exchange and/or admitted to listing, trading and/or quotation
by any other listing authority, stock exchange and/or quotation system situated or operating in a Member State.
Taxation: See Condition 7 of the relevant Conditions and “Relevant Jurisdiction” definition
in Condition 6(c) of the Terms and Conditions of the Senior Notes, Dated
Subordinated Notes and Undated Subordinated Notes and Condition 6(b) of the
Terms and Conditions of the Capital Notes.
All payments on Notes issued by each of ZF (Luxembourg) and ZF (UK) will be
made without deduction for or on account of withholding tax imposed by
Luxembourg and Switzerland (in the case of Notes issued by ZF (Luxembourg)),
the United Kingdom and Switzerland (in the case of Notes issued by ZF (UK)) or
required pursuant to an agreement described in Section 1471(b) of the U.S. Internal
Revenue Code of 1986 (the “Code”) unless such withholding is required by law and/or by agreement of the relevant Issuer or the Guarantor. Subject to a number of
exceptions set out in Condition 7 of the relevant Conditions, if such withholding is
required, the relevant Issuer will generally be required to pay such additional
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amounts as will result in the receipt by the Noteholders of such amounts as they
would have received had no such withholding been required.
All payments on Notes issued by ZIC will be made subject to withholding tax
imposed by Switzerland to the extent required by law and/or by agreement of the Issuer or the Guarantor. No additional amounts will be paid by ZIC in respect of
any such withholding as set out in Condition 7 of the relevant Conditions, save in
the case of Restricted Capital Notes and Restricted Notes on which additional
amounts will, subject to certain exceptions, be payable as discussed in Condition 7
of the Terms and Conditions of the Capital Notes and Condition 7 of the Terms
and Conditions of the Senior Notes, Dated Subordinated Notes and Undated
Subordinated Notes.
Negative Pledge: The terms of the Senior Notes issued by ZF (Luxembourg) and ZF (UK) will
contain a negative pledge provision as further described in Condition 3(c) of the
Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated
Subordinated Notes.
Cross Default: In relation to any Senior Notes, the terms of such Senior Notes will contain a cross
default provision as further described in Condition 9(a)(iii) of the Terms and
Conditions of the Senior Notes, Dated Subordinated Notes and Undated
Subordinated Notes.
Status of the Notes: Notes issued under the Programme may either be senior notes (“Senior Notes”),
dated subordinated notes (“Dated Subordinated Notes”) or undated subordinated
notes (“Undated Subordinated Notes”, together with Dated Subordinated Notes,
“Subordinated Notes”) or, in the case of Notes issued by ZIC only, Capital Notes
(the “Capital Notes”). The status of any such Subordinated Notes or Capital Notes
will be described in Condition 2 of the relevant Conditions and the applicable Final
Terms.
Senior Notes: The Senior Notes will constitute direct, unconditional, unsubordinated and, subject to the provision of Condition 3(c) of the Terms and Conditions of the Senior
Notes, Dated Subordinated Notes and Undated Subordinated Notes, unsecured
obligations of the relevant Issuer and (subject as aforesaid) will rank pari passu, without any preference among themselves save for statutory preferred exceptions,
with all other outstanding unsecured and unsubordinated obligations of the relevant
Issuer, present and future, but, in the event of insolvency, only to the extent
permitted by applicable laws relating to creditors’ rights.
Subordinated Notes: The Subordinated Notes will rank as set out in the applicable provisions of
Condition 2 of the Terms and Conditions of the Senior Notes, Dated Subordinated
Notes and Undated Subordinated Notes, as specified in the applicable Final Terms.
Capital Notes: The Capital Notes will rank as set out in the applicable provisions of Condition 2 of the Terms and Conditions of the Capital Notes, as specified in the applicable
Final Terms.
The Capital Notes will constitute direct, subordinated and unsecured obligations of
ZIC and will rank pari passu, without any preference among themselves. The
claims of the holders of Capital Notes will rank on a voluntary or involuntary
insolvency, winding-up, liquidation, dissolution or other similar proceedings of or
against ZIC after the claims of any Senior Creditors (as defined in Condition 2) of
ZIC, pari passu with the claims of the holders of any subordinated obligations of
ZIC which whether now or in the future rank or are expressed to rank pari passu
with the claims of the holders of the Capital Notes and prior to the claims of the
holders of all classes of issued shares in the share capital of ZIC.
Save as otherwise specified in the applicable Final Terms, in the event of a voluntary or involuntary insolvency, winding-up, liquidation, dissolution or other
similar proceedings of or against the Issuer, there shall be payable on each Capital
Note, subject to the subordination provisions set out above, an amount equal to the
principal amount of each Capital Note with, unless otherwise specified in the
applicable Final Terms, unpaid and outstanding Deferred Interest and interest
which has accrued up to, but excluding, the date of repayment.
Holders of Capital Notes will have limited remedies, as described under Condition
9 of the Terms and Conditions of the Capital Notes.
Guarantees by ZIC: Each Tranche of Senior Notes issued by ZF (Luxembourg) or ZF (UK) will be
unconditionally and irrevocably guaranteed by ZIC (each such guarantee, a
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“Senior ZIC Guarantee”). Each Senior ZIC Guarantee will be governed by Swiss
law, will be issued by ZIC on the issue date of the relevant Tranche of Notes and
will be limited to its stated maximum amount. The obligations of ZIC under each
Senior ZIC Guarantee will be direct, non-accessory, unconditional, unsubordinated and unsecured obligations of ZIC and (subject as aforesaid) will rank pari passu with all other outstanding unsecured and unsubordinated obligations of ZIC,
present and future, save for statutorily preferred exceptions, but, in the event of
insolvency, only to the extent permitted by applicable laws relating to creditors’
rights. Payment under the relevant Senior ZIC Guarantee shall be made by ZIC
within 7 days of receipt by it of notice from the Trustee that such payment has
become due and remains unpaid.
Each Tranche of Subordinated Notes issued by ZF (Luxembourg) or ZF (UK) will
be unconditionally and irrevocably guaranteed on a subordinated basis by ZIC by
way of an unsecured and subordinated guarantee (each such guarantee, a
“Subordinated ZIC Guarantee”). The obligations of ZIC under each Subordinated ZIC Guarantee will constitute direct, non-accessory, unconditional,
subordinated and unsecured obligations of ZIC ranking (i) after the claims of
Senior Creditors, (ii) pari passu with Subordinated Notes and any other
subordinated obligations of ZIC which whether now or in the future rank or are
expressed to rank pari passu with the claims of the holders of such Subordinated
Notes or the beneficiaries of the Subordinated ZIC Guarantee and (iii) prior to the
claims of holders of any Capital Notes and of all claims of issued shares in the
share capital of the Guarantor, it being understood that ZIC’s obligations in respect
of certain guarantees (as more fully described under the section “Form of
Subordinated Guarantee”) shall rank senior to the Subordinated ZIC Guarantee.
Prescription: The Notes and Coupons will become void unless presented for payment within a
period of ten years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 8 of the relevant Conditions)
therefor.
Listing and Admission to Trading: Applications have been made for the Notes to be admitted to trading on the
regulated market of the Luxembourg Stock Exchange (which is a regulated market
pursuant to Directive 2004/39/EC) and listed on the Official List of the
Luxembourg Stock Exchange for a period of twelve months from the date hereof.
The Notes may also be admitted to listing, trading and/or quotation by any other
listing authorities, stock exchanges and/or quotation systems (including the SIX
Swiss Exchange) as may be agreed between the relevant Issuer and the relevant
Dealer in relation to each Series.
The applicable Final Terms will state whether or not and, if so, on which stock exchange(s) the Notes are to be listed.
Governing Law: The Notes (other than the provisions of Condition 2 of the Terms and Conditions
of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes in
relation to Subordinated Notes which will be governed by, and construed in
accordance with, the law of the jurisdiction of incorporation of the relevant Issuer
of the Subordinated Notes and Condition 2 of the Terms and Conditions of the
Capital Notes which will be governed by, and construed in accordance with, the
laws of Switzerland) will be governed by, and construed in accordance with,
English law. Holders of Listed Swiss Franc Notes should note that, among other
things, under the Terms and Conditions of the Senior Notes, Dated Subordinated
Notes and Undated Subordinated Notes, collective representation of investors is
possible, albeit without any guarantee that investors’ anonymity can be assured.
Each Senior ZIC Guarantee and each Subordinated ZIC Guarantee will be
governed by Swiss law.
Selling Restrictions: There are selling restrictions in relation to the U.S., the European Economic Area,
Ireland, the United Kingdom and Japan and such other restrictions as may be
required in connection with the offering and sale of a particular Tranche of Notes.
See “Subscription and Sale” below.
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FORM OF THE NOTES AND THE CAPITAL NOTES
The Notes of each Tranche will be either in bearer form or registered form.
With respect to a particular Series of Registered Notes, the Registered Notes of each Tranche of such Series offered and sold in
reliance on Regulation S under the U.S. Securities Act, which will be sold to non-U.S. persons outside the U.S., will initially be
represented by a Reg. S Global Note which will be registered in the name of Citivic Nominees Limited as nominee for, and will
be deposited with Citibank, N.A. as common depositary for, and in respect of interests held through, Euroclear and Clearstream,
Luxembourg for the accounts of their respective participants. Prior to expiry of the distribution compliance period applicable to
each Tranche of Notes, interests in a Reg. S Global Note may not be offered or sold to or for the account or benefit of, a U.S.
person save as otherwise provided in Condition 10 of the relevant Conditions and may not be held otherwise than through
Euroclear or Clearstream, Luxembourg and such Reg. S Global Note will bear a legend regarding such restrictions on transfer.
Registered Notes will not be exchangeable for Bearer Notes.
Interests in the Reg. S Global Note will be exchangeable for Individual Registered Notes in the following limited circumstances:
(i) if Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of
holiday, statutory or otherwise) or announces its intention permanently to cease business or does in fact do so and no alternative
clearance system acceptable to the Trustee is available, or (ii) the Trustee has instituted or has been directed to institute any
judicial proceeding in a court to enforce the rights of Noteholders under the Notes represented by such Reg. S Global Note, and
the Trustee has been advised by counsel that in connection with such proceedings it is necessary or appropriate for the Trustee to
obtain possession of Individual Registered Notes representing the Reg. S Global Note.
Individual Registered Notes may also be sold outside the U.S. in reliance on Regulation S under the U.S. Securities Act.
Payments of the principal of, and interest (if any) on, the Reg. S Global Notes will be made to the nominee of Euroclear and/or
Clearstream, Luxembourg as the registered holders of the Reg. S Global Notes. None of the relevant Issuer, the Trustee, the Agent, any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Reg. S Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Payments of principal on the Reg. S Notes (as defined in the Trust Deed) will be made to the persons shown on the Register at the
close of business on the business day immediately prior to the relevant payment date. Payments of interest on the Reg. S Notes
will be made to, or to the order of, the person whose name is entered in the Register at the close of business on the Clearing
System Business Day immediately prior to the date for payment, where Clearing System Business Day means Monday to Friday
inclusive except 25 December and 1 January.
Each Tranche of Bearer Notes (other than a Tranche of Listed Swiss Franc Notes) will be initially represented by either (i) a Temporary Global Note or (ii) a Permanent Global Note, in each case without interest coupons or talons, which, if it is not
intended to be issued in new global note (“NGN”) form, and each Registered Global Note which is not intended to be held under
the NSS, each as specified in the relevant Final Terms, will be delivered to a common depositary for Euroclear and Clearstream,
Luxembourg and each Global Note which is intended to be issued in NGN form, and each Registered Global Note which is
intended to be held under the NSS, each as specified in the relevant Final Terms, will be delivered on or around the issue date of
the relevant Tranche of the Notes with a common safekeeper for Euroclear and Clearstream, Luxembourg.
On 13 June 2006 the European Central Bank (the “ECB”) announced that Notes in NGN form are in compliance with the
“Standards for use of EU securities settlement systems in ESCB credit operations” of the central banking system for the euro (the
“Eurosystem”), provided that certain other criteria are fulfilled. At the same time the ECB also announced that arrangements for
Notes in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June 2006 and that debt securities in
global bearer form issued through Euroclear and Clearstream, Luxembourg after 31 December 2006 will only be eligible as collateral for Eurosystem operations if the NGN form is used and certain other criteria are fulfilled. From 1 October 2010,
Registered Global Notes which are cleared through an international central securities depositary and intended to constitute eligible
collateral for Eurosystem monetary policy operations will need to be issued under a NSS. Such Registered Global Notes will be
registered in the name of a nominee of the international central securities depositary acting as common safekeeper and asset
servicing functions in respect of such Registered Global Notes will be performed by an agent of the international central securities
depositaries acting as common service provider.
Whilst any Note is represented by a Temporary Global Note and subject to United States Treasury Regulations Section 1.163-
5(c)(2)(i)(D) (the “TEFRA D”) selling restrictions, or any successor rules in substantially the same form as such rules for the
purposes of section 4701 of the Code, payments of principal and interest (if any) due prior to the Exchange Date (as defined
below) will be made against presentation of the Temporary Global Note only to the extent that certification (in a form to be provided) to the effect that the beneficial owners of interest in such Note are not U.S. persons or persons who have purchased for
resale to any U.S. person, as required by U.S. Treasury regulations, has been received by Euroclear and/or Clearstream,
Luxembourg and Euroclear and/or Clearstream, Luxembourg, as applicable, has given a like certification (based on the
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certifications it has received) to the Agent. Listed Swiss Franc Notes will be represented by a Permanent Global SIS Note
exchangeable for Definitive Bearer Notes in the circumstances set out therein and holders of such Notes will not have the right to
effect or demand the conversion of the Permanent Global SIS Note representing such Swiss Franc Notes into, or delivery of,
Notes in definitive or uncertificated form. Listed Swiss Franc Notes will be delivered through SIS or such other intermediary in Switzerland recognised for such purposes by the SIX Swiss Exchange on or prior to the original issue date of such Notes. Any
reference in this section “Form of the Notes and the Capital Notes” to (i) Euroclear and/or Clearstream, Luxembourg shall,
whenever the context so permits, be deemed to include a reference to any additional or alternative clearance system (including SIS
or such other intermediary in Switzerland recognised for such purposes by the SIX Swiss Exchange on or prior to the original
issue date of such Notes) approved by the relevant Issuer, ZIC (where ZIC is not the relevant Issuer), the Trustee and the Agent,
and (ii) “Notes” shall be deemed to include the Permanent Global SIS Note issuable in respect of Listed Swiss Franc Notes. A
Permanent Global SIS Note representing Swiss Franc Notes will be exchangeable for definitive Notes in whole but not in part
only if the Swiss paying agent should, after consultation with the Issuer, deem the printing of definitive Notes to be necessary or
useful, or if the presentation of definitive Notes is required by Swiss or other applicable laws and regulations in connection with
the enforcement of rights of holders of Swiss Franc Notes, or if the Swiss paying agent at any time at its discretion determines to
have definitive Notes issued; holders of Swiss Franc Notes will not have the right to effect or demand the conversion of the Permanent Global SIS Note representing such Swiss Franc Notes into, or delivery of, Notes in definitive or uncertificated form. If
definitive Notes are delivered, the relevant Permanent Global SIS Note will be immediately cancelled by the Swiss paying agent
and the definitive Notes shall be delivered to the relevant holders against cancellation of the relevant Swiss Franc Notes in such
holders’ securities accounts.
On and after the date (the “Exchange Date”) which is 40 days after the date on which any Temporary Global Note is issued,
interests in such Temporary Global Note will be exchangeable (free of charge) upon a request as described therein either for
interests in a Permanent Global Note without interest coupons or talons or for Definitive Bearer Notes (notwithstanding the Final
Terms may specify that no Definitive Bearer Notes will be issued over a certain denomination) with, where applicable, interest
coupons and talons attached (as indicated in the applicable Final Terms and subject, in the case of Definitive Bearer Notes, to such
prior notice as is specified in the applicable Final Terms) in each case (if the Notes are subject to TEFRA D selling restrictions, or
any successor rules in substantially the same form as such rules for the purposes of section 4701 of the Code) against certification of beneficial ownership as described in the second sentence of the immediately preceding paragraph unless such certification has
already been given. The holder of a Temporary Global Note will not be entitled to collect any payment of interest or principal due
on or after the Exchange Date unless upon due certification exchange of the Temporary Global Note is improperly withheld or
refused.
Pursuant to the Agency Agreement (as defined under “Terms and Conditions of the Senior Notes, Dated Subordinated Notes and
Undated Subordinated Notes” and under “Terms and Conditions of the Capital Notes” below) the Agent shall arrange that, where
a further Tranche of Notes is issued, the Notes of such Tranche shall be assigned (where applicable) a common code and ISIN by
Euroclear and Clearstream, Luxembourg or CUSIP number which are different from the common code and ISIN or CUSIP
number assigned to Notes of any other Tranche of the same Series until at least 40 days (as notified by the Agent to the relevant
Dealer or, in the case of a syndicated issue, the lead manager) after the completion of the distribution of the Notes of such Tranche.
Payments of principal and interest (if any) on a Permanent Global Note will be made through Euroclear and/or Clearstream,
Luxembourg against presentation or surrender (as the case may be) of the Permanent Global Note (if the Permanent Global Note
is not intended to be issued in NGN form) without any requirement for certification. The applicable Final Terms will specify that
either (i) a Permanent Global Note will be exchangeable (free of charge), in whole but not in part, for definitive bearer Notes with,
where applicable, interest coupons and talons attached upon not less than 60 days’ written notice from Euroclear and/or
Clearstream, Luxembourg (acting on the instructions of any holder of such Permanent Global Note) to the Agent as described
therein or (ii) a Permanent Global Note will be exchangeable (free of charge), in whole but not in part, for definitive bearer Notes
with, where applicable, interest coupons and talons attached only upon the occurrence of certain specified events as described
therein. The events described are that (i) an Event of Default (as defined in Condition 9 of the Terms and Conditions of the Senior
Notes, Dated Subordinated Notes and Undated Subordinated Notes) or a Dissolution Event (as defined in Condition 9 of the Terms and Conditions of the Capital Notes) occurs in respect of any Note or (ii) Euroclear or Clearstream, Luxembourg are closed
for business for a continuous period of 14 days (weekends and public holidays excepted) or announce an intention permanently to
cease business or have in fact done so and no alternative clearing system satisfactory to the Trustee is available. The relevant
Issuer will promptly give notice to Noteholders in accordance with Condition 13 of the relevant Conditions if any such event
occurs. In the event of the occurrence of any such event, Euroclear and/or Clearstream, Luxembourg (acting on the instructions of
any holder of an interest in such Permanent Global Note) may give notice to the Agent requesting exchange.
For so long as any of the Notes is represented by a Bearer Global Note deposited with, or a Reg. S Global Note registered in the
name of a nominee of, a common depositary for Euroclear and Clearstream, Luxembourg, each person who is for the time being
shown in the records of Euroclear or of Clearstream, Luxembourg as entitled to a particular nominal amount of Notes (in which
regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg or its nominee as to the nominal amount of Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of
manifest error) shall be deemed to be the holder of such nominal amount of such Notes for all purposes other than with respect to
the payment of principal or interest on the Notes, for which purpose such common depositary or its nominee shall be deemed to be
the holder of such nominal amount of such Notes in accordance with and subject to the terms of the relevant Bearer Global Note
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or Reg. S Global Note and the Trust Deed (and the expressions “Noteholder” and “holder of Notes” and related expressions shall
be construed accordingly).
In relation to any Tranche of Notes which is represented by a Global Note which, in accordance with its terms, is exchangeable into Definitive Notes in circumstances other than in the limited circumstances specified in such Global Note, such Notes may only
be traded in principal amounts of at least the Specified Denomination (or if more than one Specified Denomination, the lowest
Specified Denomination).
Notes which are represented by a Global Note will be transferable only in accordance with the applicable procedures Euroclear
and Clearstream, Luxembourg, in each case, to the extent applicable.
The following legend will appear on all Global Notes, Reg. S Global Notes, Definitive Notes and interest coupons in respect of
obligations with an original maturity in excess of 365 days:
“Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code.”
The sections referred to provide that U.S. holders, with certain exceptions, will not be entitled to deduct any loss on Bearer Notes
or interest coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition, redemption or payment
of principal in respect of Bearer Notes or interest coupons.
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TERMS AND CONDITIONS OF THE SENIOR NOTES, DATED SUBORDINATED NOTES AND UNDATED SUBORDINATED NOTES
The following, save for the paragraphs in italics, are the Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes which will be endorsed on each Global Note and each Definitive Bearer Note or Individual Registered Note, in the latter case only if permitted by the relevant stock exchange (if any) and agreed by the relevant Issuer and the relevant Dealer at the time of issue but, if not so permitted by the relevant stock exchange (if any) and agreed by the relevant Issuer and the relevant Dealer at the time of issue but, if so permitted and agreed, such Definitive Bearer Note or Individual Registered Note will have endorsed thereon or attached thereto such Terms and Conditions. The applicable Final Terms (or the relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and each Definitive Bearer Note or
Individual Registered Note. Reference should be made to “Form of the Notes and the Capital Notes” above for a description of the content of Final Terms which will include the definitions of certain terms used in the following Terms and Conditions or specify which of such terms are to apply in relation in the relevant Notes.
This Note is one of a Series (as defined below) of Notes issued by Zurich Finance (Luxembourg) S.A. (“ZF (Luxembourg)”), Zurich Finance (UK) plc (“ZF (UK)”) or Zurich Insurance Company Ltd (“ZIC”) and, together with ZF (Luxembourg) and ZF
(UK), the “Issuers” and each an “Issuer”) and references in these Terms and Conditions to the “relevant Issuer” shall be to the
issuer of the Notes named in the applicable Final Terms (as defined below), constituted by an amended and restated trust deed (as
further modified and/or supplemented and/or restated from time to time, the “Trust Deed”) dated 19 May 2014 made between the
Issuers, Zurich Insurance Group Ltd (“ZIG”) and Citicorp Trustee Company Limited (the “Trustee”, which expression shall
include any successor as trustee).
References herein to the “Notes” shall be references to the Notes of this Series and shall mean:
(i) in relation to any Notes represented by a Global Note (which expression shall include any Temporary Global Note or
Permanent Global Note or Permanent Global SIS Note or Reg. S Global Note, all as defined below), units of the lowest
Specified Denomination in the Specified Currency; and
(ii) in relation to any Notes in definitive bearer form (“Definitive Bearer Notes”) issued in exchange for an interest or interests
in a Global Note in bearer form (“Bearer Global Note”), units of the lowest Specified Denomination in the Specified
Currency; and
(iii) in relation to Individual Registered Notes either issued as such or issued in exchange for a Reg. S Global Note, units of the
lowest Specified Denomination in the Specified Currency.
The Final Terms for this Note (or the relevant provisions thereof) are attached to or endorsed on this Note and supplement these
Terms and Conditions. References to the “applicable Final Terms” are to the Final Terms (or the relevant provisions thereof)
attached to or endorsed on this Note.
The Notes and the Coupons (as defined below) are the subject of an amended and restated agency agreement (the “Agency Agreement” which expression shall, where the context permits, include any supplements or amendments thereto and any agency
agreement relating to Listed Swiss Franc Notes as referred to in Condition 5(e)) dated 19 May 2014 and made between the
Issuers, Citibank, N.A. as issuing and principal paying agent and agent bank (the “Agent”, which expression shall include any
successor agent specified in the applicable Final Terms), the other paying agents named therein (together with the Agent, the
“Paying Agents”, which expression shall include any additional or successor paying agents), Banque Internationale à
Luxembourg (the “Luxembourg Listing Agent”), the registrars named therein (each, a “Registrar”, which expression shall
include any additional or successor registrar), the transfer agents named therein (the “Transfer Agents”, which expression shall
include any additional or successor transfer agents) and the Trustee.
Interest bearing Definitive Bearer Notes (unless otherwise indicated in the applicable Final Terms) have interest coupons (“Coupons”) and, if indicated in the applicable Final Terms, talons for further Coupons (“Talons”) attached on issue. Any
reference herein to Coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons. Registered
Notes do not have Coupons attached on issue.
The Trustee acts for the benefit of the holders for the time being of the Notes (the “Noteholders”) in accordance with the
provisions of the Trust Deed.
As used herein, “Tranche” means Notes which are identical in all respects (including as to listing) and “Series” means a Tranche
of Notes together with any further Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single
series and (ii) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement
Dates and/or Issue Prices.
Copies of the Trust Deed, the Agency Agreement, any applicable Senior ZIC Guarantee (as defined below), any applicable
Subordinated ZIC Guarantee (as defined below) and the applicable Final Terms are available for inspection during normal
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business hours at the principal London office for the time being of the Trustee (being at the date of the Trust Deed at Citicorp
Trustee Company Limited, 14th Floor, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB) and are available at
the specified office of each of the Agent, the other Paying Agents, the Registrar and the Transfer Agents save that, if this Note is
an unlisted Note of any Series, the applicable Final Terms will only be available for inspection at the principal London office of the Agent by a Noteholder holding one or more unlisted Notes of that Series and such Noteholder must produce evidence
satisfactory to the Trustee as to its holding of Notes and as to identity. The Noteholders and the holders of the Coupons (the
“Couponholders”) are deemed to have notice of, and are bound by, and are entitled to the benefit of, all the provisions of the
Trust Deed, the Agency Agreement, the Senior ZIC Guarantee, the Subordinated ZIC Guarantee and the applicable Final Terms
which are applicable to them.
Words and expressions defined in the Trust Deed, the Agency Agreement or used in the applicable Final Terms shall have the
same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and
provided that, in the event of inconsistency between the Agency Agreement and the Trust Deed, the Trust Deed will prevail and,
in the event of any inconsistency between the Trust Deed or the Agency Agreement and the applicable Final Terms, the applicable
Final Terms will prevail.
1. Form, Denomination and Title
The Notes are either in bearer form (“Bearer Notes”) or in registered form (“Registered Notes”) as specified in the applicable
Final Terms and, in the case of Definitive Bearer Notes or Individual Registered Notes, serially numbered, in the Specified
Currency and the Specified Denomination(s) specified in the applicable Final Terms. Bearer Notes of one Specified Denomination
may not be exchanged for Bearer Notes of another Specified Denomination.
This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note or a combination of any of the foregoing, depending
upon the Interest Basis and Redemption/Payment Basis shown in the applicable Final Terms.
This Note is a Listed Swiss Franc Note if it is denominated or payable in Swiss francs and listed on the SIX Swiss Exchange and the applicable Final Terms so state.
Each Listed Swiss Franc Note will be represented exclusively by a Permanent Global SIS Note in bearer form which will be
deposited with SIX SIS AG, Olten, Switzerland (“SIS”), or such other intermediary in Switzerland recognised for such purposes
by the SIX Swiss Exchange (with respect to any such Permanent Global SIS Note, SIS or such other intermediary, the
“Intermediary”) on or prior to the original issue date of such Note. As a matter of Swiss law, once the Permanent Global SIS
Note has been deposited with the Intermediary and entered into the accounts of one or more participants of the Intermediary, the
Listed Swiss Franc Notes represented thereby will constitute intermediated securities (Bucheffekten) within the meaning of the
Swiss Federal Intermediated Securities Act (Bucheffektengesetz) (the “Intermediated Securities”). The Permanent Global SIS
Note will be exchangeable for definitive Notes in whole but not in part only if the Swiss paying agent should, after consultation
with the relevant Issuer, deem the printing of definitive Notes to be necessary or useful, or if the presentation of definitive Notes is required by Swiss or other applicable laws and regulations in connection with the enforcement of rights of Noteholders, or if the
Swiss paying agent at any time at its discretion determines to have definitive Notes issued; holders of Listed Swiss Franc Notes
will not have the right to effect or demand the exchange of the Permanent Global SIS Note representing such Listed Swiss Franc
Notes into, or delivery of, Notes in definitive or un-certificated form. If definitive Notes are delivered, the relevant Permanent
Global SIS Note will be immediately cancelled by the Swiss paying agent and the definitive Notes shall be delivered to the
relevant holders against cancellation of the relevant Listed Swiss Franc Notes in such holders' securities accounts. As a matter of
Swiss law, a holder of an interest in the Permanent Global SIS Note retains a quotal co-ownership interest (Miteigentumsanteil) in
the Permanent Global SIS Note to the extent of the Notes represented by such Permanent Global SIS Note in which such holder
has an interest; provided, however, that, for so long as the Permanent Global SIS Note remains deposited with the Intermediary
(i.e., for so long as the Notes represented thereby constitute Intermediated Securities), the co-ownership interest is suspended and
the Notes represented thereby may only be transferred by the entry of the transferred Notes in a securities account of the
transferee. For so long as Notes constitute Intermediated Securities, as a matter of Swiss law, (i) the records of the Intermediary will determine the number of Notes held through each participant of the Intermediary and (ii) the holders of such Notes will be the
persons holding such Notes in a securities account (Effektenkonto) that is in their name or, in the case of intermediaries
(Verwahrungsstellen), the intermediaries (Verwahrungsstellen) holding such Notes for their own account in a securities account
(Effektenkonto) that is in their name.
Each Tranche of Bearer Notes may be initially represented by a temporary Global Note without Coupons or Talons (a
“Temporary Global Note”) or, if so specified in the applicable Final Terms, a permanent Global Note (a “Permanent Global Note”), which, if the Bearer Global Notes are not intended to be issued in new global note (“NGN”) form will be delivered to the
common depositary for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme, Luxembourg
(“Clearstream, Luxembourg”) and, if the Bearer Global Notes are intended to be issued in NGN form, will be delivered to the
Common Safekeeper for Euroclear and Clearstream, Luxembourg. On or after the end of the period that ends 40 days after completion of the distribution of each Tranche of Notes, as certified by the relevant Dealer, in the case of a non syndicated issue,
or the Lead Manager, in the case of a syndicated issue (the “Distribution Compliance Period”), the Temporary Global Note will
be exchangeable upon a request as described therein either for interests in a Permanent Global Note without Coupons or Talons or
for Definitive Bearer Notes (as indicated in the applicable Final Terms and subject, in the case of Definitive Bearer Notes to such
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notice period as is specified in the applicable Final Terms), in each case against certification to the effect that the beneficial owner
of interests in such Temporary Global Note is not a U.S. person or a person who has purchased for resale to any U.S. person, as
required by U.S. Treasury regulations. Each Tranche of Bearer Notes may also be initially represented by a Permanent Global SIS
Note (as defined in the Trust Deed). Unless otherwise specified in the applicable Final Terms, a Permanent Global Note will be exchangeable (free of charge), in whole but not in part, for Definitive Bearer Notes with, where applicable, Coupons and Talons
attached (i) if an Event of Default (as defined in Condition 9) occurs in respect of any Note, (ii) if Euroclear or Clearstream,
Luxembourg is closed for business for a continuous period of 14 days (weekends and public holidays excepted) or announces an
intention to cease business permanently or in fact does so and no alternative clearing system satisfactory to the Trustee is available
or (iii), if so specified in the applicable Final Terms, at the option of the Noteholder, provided that, in the case of an issue of Notes
with a minimum denomination of EUR 100,000 (or the equivalent thereof in the currency in which such issue of Notes is
denominated as determined on the date of issue of such Notes) and smaller integral multiples thereof only exchange events (i) or
(ii) above will apply.
With respect to a particular Series of Registered Notes, the Registered Notes of each Tranche sold outside the U.S. in reliance on
Regulation S under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), will, unless otherwise specified in the applicable Final Terms, be represented by a permanent global Note in registered form, without Coupons or Talons, (the “Reg. S Global Note”) which will be registered in the name of Citivic Nominees Limited as nominee for, and will be deposited with
Citibank, N.A. as common depositary for, and in respect of interests held through, Euroclear and Clearstream, Luxembourg. Notes
in individual registered form (“Individual Registered Notes”) issued in exchange for Reg. S Global Notes or otherwise sold or
transferred in reliance on Regulation S under the U.S. Securities Act, together with the Reg. S Global Notes, are referred to herein
as “Reg. S Notes”. Prior to expiry of the Distribution Compliance Period interests in a Reg. S Global Note may be held only
through Euroclear or Clearstream, Luxembourg.
Individual Registered Notes from the date of issue may, if specified in the applicable Final Terms, be issued in reliance on
Regulation S under the U.S. Securities Act.
Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable.
Subject as set out below, title to the Bearer Notes and Coupons will pass by delivery and title to the Registered Notes will pass
upon the registration of transfers in accordance with the Agency Agreement and the Trust Deed. The relevant Issuer, ZIC (where
ZIC is not the relevant Issuer), the Trustee, the Agent, any Paying Agent, the Registrar, and any Transfer Agent may (subject to
applicable laws or as otherwise ordered by a court of competent jurisdiction or an official authority) deem and treat the bearer of
any Bearer Note or Coupon and the registered holder of any Registered Note as the absolute owner thereof for all purposes
(whether or not it is overdue and notwithstanding any notice of ownership, trust or any interest in it, any writing on it or on the
related Individual Registered Note or notice of any previous loss or theft of it) and no person will be liable for so treating the
holder.
No person shall have any right to enforce any term or condition of this Note or the Trust Deed under the United Kingdom
Contracts (Rights of Third Parties) Act 1999.
Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time
being of Euroclear or Clearstream, Luxembourg.
References in these Terms and Conditions to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits,
be deemed to include a reference to any additional or alternative clearing system (including SIS) approved by the relevant Issuer,
the Trustee and the Agent and specified in the applicable Final Terms.
2. Status of the Notes
(a) Senior Notes
This Condition 2(a) is only applicable to senior Notes (“Senior Notes”) issued by the relevant Issuer which are described in the
applicable Final Terms as being issued on an unsubordinated basis.
The Senior Notes and the relative Coupons constitute direct, unconditional, unsubordinated and (subject to the provisions of
Condition 3(c)) unsecured obligations of the relevant Issuer and (subject as aforesaid) rank and will rank pari passu, without any
preference among themselves save for statutorily preferred exceptions, with all other outstanding unsecured and unsubordinated
obligations of the relevant Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable
laws relating to creditors’ rights.
(b) Subordinated Notes This Condition 2(b) is only applicable to dated subordinated notes (“Dated Subordinated Notes”) and undated subordinated notes (“Undated Subordinated Notes”) issued by the relevant Issuer. Dated Subordinated Notes and Undated Subordinated
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Notes are together referred to as “Subordinated Notes”. The provisions of this Condition 2(b) are subject to Condition 2(c) below.
(c) Ranking on a winding-up The Subordinated Notes and the relative Coupons will constitute direct, subordinated and unsecured obligations of the relevant Issuer and will rank pari passu, without any preference, among themselves. The Subordinated Notes and relative Coupons will rank on a winding-up of the relevant Issuer: (i) after the claims of any Senior Creditors (as defined below) of the relevant Issuer; (ii) pari passu with the claims (a) of the holders of other Undated Subordinated Notes and Dated Subordinated Notes of the
relevant Issuer; (b) of other creditors of the relevant Issuer whose claims rank or are expressed to rank pari passu with the claims of the Noteholders of any Undated Subordinated Notes or Dated Subordinated Notes of that Issuer; and (c) (in the case where ZIC is the relevant Issuer) under the Subordinated ZIC Guarantee (as defined below); and
(iii) prior to claims of the holders of any Capital Notes (as defined in the Trust Deed) (in the case where ZIC is the relevant
Issuer), and of any other subordinated obligations of the relevant Issuer which rank or are expressed to rank junior to the claims of (a) the Noteholders of any Undated Subordinated Notes or Dated Subordinated Notes of that Issuer or, as appropriate, (b) under the Subordinated ZIC Guarantee.
In the event of a winding-up, liquidation, dissolution or other similar proceedings of the relevant Issuer, there shall be payable in such winding-up, liquidation or dissolution on each Subordinated Note, subject to and after the claims of all Senior Creditors and prior to any payment to the holders of debt that ranks or is expressly designated as ranking junior to the Subordinated Notes, or holders of issued shares at such time in the relevant Issuer, an amount equal to the principal amount of such Subordinated Notes together with interest which has accrued up to, but excluding, the date of repayment (including any Arrears of Interest (as defined below)). As used herein, “Senior Creditors” of an entity means: (i) all unsubordinated creditors of that entity; (ii) all creditors of that entity whose claims are subordinated by operation of law or pursuant to their terms, to the claims of other
unsubordinated creditors of that entity but not further or otherwise; and (iii) in the case of a relevant Issuer, all other subordinated creditors of that entity except those whose claims rank or are expressed
to rank pari passu with or junior to the claims (a) of the Noteholders of the Undated Subordinated Notes or Dated Subordinated Notes of such relevant Issuer or, as appropriate, (b) under the Subordinated ZIC Guarantee.
Subject to applicable law, neither the Trustee nor any Noteholder of the Subordinated Notes may exercise or claim any right of set-off in respect of any amount owed to it by the relevant Issuer arising under or in connection with the Subordinated Notes and each such Noteholder of such Subordinated Note shall, by virtue of being the Noteholder of any of the Subordinated Notes, be deemed to have waived all such rights of set-off. For the avoidance of doubt, the obligations of ZIC in relation to either Subordinated Notes issued by it or under a Subordinated ZIC Guarantee (see Condition 3(b) below) will rank on a winding-up, liquidation, dissolution or other similar proceedings: (a) pari passu with the obligations of ZIC in respect of its €425m 7.5 per cent Subordinated Notes due 2039 and its €1,000m
4.25 per cent Subordinated Notes due 2043 and in respect of its guarantee of the €269m 4.5 per cent Subordinated Notes due 2025, the £450m 6.625 per cent Undated Subordinated Notes, the CHF700m 4.25 per cent Undated Subordinated Notes, the CHF500m 4.625 per cent Undated Subordinated Notes and any future Subordinated Notes issued by ZIC; and
(b) senior to the obligations of ZIC in respect of its subordinated support agreements entered into in connection with the
enhanced capital advantaged preferred securities (ECAPS) issued by ZFS Finance (USA) Trust II and the Trust Preferred Securities issued by ZFS Finance (USA) Trust V and its obligations under the €143m 12 per cent Capital Notes, the U.S.$500m 8.250 per cent Undated Reset Capital Notes and any future Capital Notes.
3. Senior ZIC Guarantee, Subordinated ZIC Guarantee and Negative Pledge
(a) Senior ZIC Guarantee Where the relevant Issuer is ZF (Luxembourg) or ZF (UK), the payment of principal and interest in respect of Senior Notes (together with any additional amounts payable under Condition 7 and all other moneys payable under the Trust Deed) up to a specified maximum amount has been unconditionally and irrevocably guaranteed by ZIC pursuant to a guarantee agreement dated the issue date of the relevant Tranche of Notes (the “Senior ZIC Guarantee”). Each Senior ZIC Guarantee provides that the Guarantor will within seven days of receipt by it of notice from the Trustee confirming that a payment referred to in the preceding sentence has become due and remains unpaid make such payment, provided that such notice from the Trustee shall, however, not be submitted to the Guarantor before seven days have passed since the due date on which such amount due under the relevant Tranche of Notes or the Trust Deed should have been paid. The Senior ZIC Guarantee, which is governed by Swiss law, is limited to a maximum amount stated in the relevant Senior ZIC Guarantee. The obligations of ZIC under the Senior ZIC Guarantee in
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respect of unsubordinated Notes constitute direct, unconditional, unsubordinated and unsecured obligations of ZIC and (subject as aforesaid) rank and will rank pari passu with all other outstanding unsecured and unsubordinated obligations of ZIC, present and future, save for statutorily preferred exceptions, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights. No Noteholder or Couponholder will be entitled to proceed directly against ZIC unless the Trustee, having become bound to do so, fails to do so within a reasonable period and such failure shall be continuing.
(b) Subordinated ZIC Guarantee Where the relevant Issuer of Subordinated Notes is ZF (Luxembourg) or ZF (UK), the payment of principal and interest in respect of the Subordinated Notes (together with any additional amounts payable under Condition 7 and all other moneys payable under the Trust Deed) up to a specified maximum amount has been unconditionally and irrevocably guaranteed on a subordinated basis by ZIC pursuant to a guarantee agreement dated the issue date of the relevant Tranche of the Subordinated Notes (the “Subordinated ZIC Guarantee”). Each Subordinated ZIC Guarantee provides that the Guarantor will, within seven days of receipt by it of notice from the Trustee confirming that a payment referred to in the preceding sentence has become due and remains unpaid, make such payment, provided that such notice from the Trustee shall, however, not be submitted to the Guarantor before seven days have passed since the due date on which such amount due under the relevant Tranche of the Subordinated Notes or the Trust Deed should have been paid. The Subordinated ZIC Guarantee, which is governed by Swiss law, is limited to the maximum amount stated in the relevant Subordinated ZIC Guarantee. The obligations of ZIC under the Subordinated ZIC Guarantee in respect of the Subordinated Notes issued by the relevant Issuer constitute direct, subordinated and unsecured obligations of the Guarantor. Claims in respect of the Subordinated ZIC Guarantee will, in the event of a winding-up, liquidation, dissolution or other similar proceedings of the Guarantor (like “Nachlassstundung”), rank pari passu with the claims of holders of Subordinated Notes issued by ZIC as described in Condition 2(c).
(c) Negative Pledge
This Condition 3(c) is only applicable to Senior Notes.
So long as any of the Notes of the relevant Series remains outstanding (as defined in the Trust Deed), the relevant Issuer (except where ZIC is the relevant Issuer) will not create or permit to subsist any mortgage, charge, pledge, lien or other form of
encumbrance or security interest upon the whole or any part of its undertaking, property, assets or revenues present or future to
secure any Relevant Debt, or to secure any guarantee of or indemnity in respect of any Relevant Debt, unless, at the same time or
prior thereto, such Issuer’s obligations under the Notes, the Coupons and the Trust Deed (i) are secured equally and rateably
therewith to the satisfaction of the Trustee, or (ii) have the benefit of such other security, guarantee, indemnity or other
arrangement as the Trustee in its absolute discretion shall deem to be not materially less beneficial to the Noteholders of the
relevant Series or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders of the
relevant Series.
For the purposes of this Condition, “Relevant Debt” means any present or future indebtedness of the relevant Issuer or any other
person in the form of, or represented by, bonds, notes, debentures, loan stock or other securities of such Issuer or such other person which are, or are capable of being, quoted, listed or ordinarily traded on any stock exchange, over-the-counter or other
securities market.
4. Interest
(a) Interest on Fixed Rate Notes
Each Fixed Rate Note bears interest on its outstanding nominal amount from (and including) the Interest Commencement Date at
the rate(s) per annum equal to the Rate(s) of Interest payable in arrear on the Interest Payment Date(s) in each year and (if
applicable) on the Maturity Date or other date fixed for redemption if that does not fall on an Interest Payment Date.
The amount of interest payable on each Interest Payment Date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.
If interest is required to be calculated for a period ending other than on an Interest Payment Date, such interest shall be calculated
by applying the Rate of Interest to each calculation amount as specified in the applicable Final Terms (“Calculation Amount”)
multiplying such sum by the applicable Fixed Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the
relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market
convention.
For the purposes of these Conditions “Fixed Day Count Fraction” means:
(i) if “Actual/Actual (ICMA)” is specified in the applicable Final Terms:
(a) where the relevant period (from and including the first day to but excluding the last day) is equal to or shorter than the
Regular Period during which it falls, the actual number of days in the relevant period divided by the product of (1) the
actual number of days in such Regular Period and (2) the number of Regular Periods normally ending in any year; and
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(b) where the relevant period (from and including the first day to but excluding the last day) is longer than one Regular
Period, the sum of:
(A) the actual number of days in such relevant period falling in the Regular Period in which it begins divided by the
product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any
year; and
(B) the actual number of days in such relevant period falling in the next Regular Period divided by the product of
(1) the actual number of days in such Regular Period and (2) number of Regular Periods normally ending in any
year;
(ii) if “30/360” is specified in the applicable Final Terms, the number of days in the period from and including the most recent
Interest Payment Date (or, if none, the Interest Commencement Date) to but excluding the relevant payment date (such
number of days being calculated on the basis of 12 30-day months) divided by 360; and
“Regular Period” means:
(i) in the case of Notes where interest is scheduled to be paid only by means of regular payments, each period from and
including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from
and including one Interest Payment Date to but excluding the next Interest Payment Date;
(ii) in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular
payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where
“Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls; and
(iii) in the case of Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the
next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date
falls other than the Interest Payment Date falling at the end of the irregular Interest Period.
“sub-unit” with respect to any currency other than euro, means the lowest amount of such currency that is available as legal
tender in the country of such currency and, with respect to euro, means one cent.
If the applicable Final Terms specify that a Mid Swap Rate is applicable to interest payable on Interest Payment Dates falling in a
specified period (the “Reset Period”), the Notes will bear interest during such Reset Period at a rate determined on the Reset
Determination Date as being the aggregate of the Reset Margin and the Specified Mid Swap Rate. The Specified Mid Swap Rate
shall be the mid-market swap rate for the Specified Swap Duration, expressed as a percentage, which appears on the Mid Swap Rate Screen Page (or such other page as may replace that page, or such other service as may be nominated by the person providing
or sponsoring the information appearing there for the purpose of displaying comparable rates) at 11.00 a.m. (local time) on the
Reset Determination Date. If swap rates do not appear on the Mid Swap Rate Screen Page, the Specified Mid Swap Rate shall be
determined by the Swap Rate Determination Agent (which, unless otherwise specified in the applicable Final Terms, shall be the
Agent) on the basis of (i) quotations provided by the principal office of each of four major banks in the relevant swap market of
the rates at which swaps in the applicable currency are offered by it at approximately 11.00 a.m. (local time) on the Reset
Determination Date to participants in the relevant swap market for the period equal to the Specified Swap Duration; and (ii) the
arithmetic mean rounded, if necessary, to the nearest 0.00001 (0.000005 being rounded upwards) of such quotations.
The Swap Rate Determination Agent will at, or as soon as practicable after, each time at which the Specified Mid Swap Rate is to
be determined, determine the Specified Mid Swap Rate for the relevant Reset Period and notify the Agent as soon as practicable
after determining the same.
The Agent will cause the Specified Mid Swap Rate to be notified to the relevant Issuer and any stock exchange on which the
relevant Notes are for the time being listed and notice thereof to be published in accordance with Condition 13 as soon as possible
after their determination but in no event later than the fourth London Business Day (as defined below) thereafter.
If for any reason the Swap Rate Determination Agent at any time after the Issue Date defaults in its obligation to determine the
Specified Mid Swap Rate, the Trustee shall determine the Specified Mid Swap Rate at such rate as, in its absolute discretion
(having such regard as it shall think fit to the foregoing provisions of this Condition, but subject always to any minimum or
maximum Rate of Interest specified in the applicable Final Terms), it shall deem fair and reasonable in all the circumstances and
any such determination shall be deemed to have been made by the Swap Rate Determination Agent.
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions of this Condition 4(a), whether by the Swap Rate Determination Agent or the Trustee,
shall (in the absence of wilful default, bad faith or manifest error) be binding on the relevant Issuer, ZIC (where ZIC is not the
relevant Issuer), the Trustee, the Agent, the Swap Rate Determination Agent, the other Paying Agents, the Registrar and any
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Transfer Agents and all Noteholders and Couponholders and (in the absence as aforesaid) no liability to the relevant Issuer, ZIC
(where ZIC is not the relevant Issuer), the Noteholders or the Couponholders shall attach to the Agent, the Trustee or the Swap
Rate Determination Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to
such provisions.
(b) Interest on Floating Rate Notes
(i) Interest Payment Dates
Each Floating Rate Note bears interest on its nominal amount from (and including) the Interest Commencement Date and such
interest will be payable in arrear on either:
(A) the Interest Payment Date(s) in each year specified in the applicable Final Terms; or
(B) if no express Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each an “Interest Payment Date”) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after
the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.
Such interest will be payable in respect of each Interest Period (which expression shall, in these Terms and Conditions, mean the
period from (and including) the Interest Commencement Date to but excluding the first Interest Payment Date and each successive
period from (and including) an Interest Payment Date to but excluding the next Interest Payment Date).
If the business day convention is specified in the applicable Final Terms and if any Interest Payment Date would otherwise fall on
a day which is not a Business Day, then, if the business day convention specified is:
(1) in any case where Specified Periods are specified in accordance with Condition 4(b)(i)(B) above, the Floating Rate
Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately
preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which
falls in the Specified Period after the preceding applicable Interest Payment Date occurred; or
(2) the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business
Day; or
(3) the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a
Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be
brought forward to the immediately preceding Business Day; or
(4) the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding
Business Day.
In this Condition, “Business Day” means a day which is both: (A) a day on which commercial banks and foreign exchange markets settle payments in any Additional Business Centre
specified in the applicable Final Terms; and (B) either (1) in relation to interest payable in Specified Currency other than euro, a day on which commercial banks and foreign
exchange markets settle payments in the principal financial centre of the country of the relevant Specified Currency (if other than any Additional Business Centre) or (2) in relation to interest payable in euro, a day on which the TARGET system is operating.
For the purposes of these Conditions “TARGET system” means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET 2) System which was launched on 19 November 2007 or any successor thereto.
(ii) Rate of Interest The Rate of Interest payable from time to time in respect of Floating Rate Notes will be determined in the manner specified in the applicable Final Terms. (A) ISDA Determination for Floating Rate Notes
Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (A), “ISDA Rate” for an Interest Period means a rate equal to the Floating Rate that would be determined by the Agent under an interest rate swap transaction if the Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the ISDA
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2006 Definitions, as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as at the Issue Date of the first Tranche of the Notes (the “ISDA Definitions”) and under which:
(1) the Floating Rate Option is as specified in the applicable Final Terms; (2) the Designated Maturity is a period specified in the applicable Final Terms; and (3) the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on the London inter-bank offered
rate (“LIBOR”) or the European inter-bank offered rate (“EURIBOR”) for a currency, the first day of that Interest Period or (ii) in any other case, as specified in the applicable Final Terms.
For the purposes of this sub-paragraph (A), “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those terms in the ISDA Definitions. When this sub-paragraph (A) applies, in respect of each relevant Interest Period the Agent will be deemed to have discharged its obligations under Condition 4(b)(iv) in respect of the determination of the Rate of Interest if it has determined the Rate of Interest in respect of such Interest Period in the manner provided in this sub-paragraph (A).
(B) Screen Rate Determination for Floating Rate Notes
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either:
(1) the offered quotation; or (2) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the
offered quotations, (expressed as a percentage rate per annum) for the Reference Rate (being either LIBOR or EURIBOR as specified in the applicable Final Terms) which appears or appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time or in the case of EURIBOR, Brussels time) on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
The Agency Agreement contains provisions for determining the Rate of Interest in the event that the Relevant Screen Page is
not available or if, in the case of (1) above, no such quotation appears or, in the case of (ii) above, fewer than three such
offered quotations appear, in each case as at the time specified in the preceding paragraph.
(iii) Minimum and/or Maximum Interest Rate
If the applicable Final Terms specify a Minimum Interest Rate for any Interest Period, then, in the event that the Rate of Interest in
respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is less than such Minimum
Interest Rate, the Rate of Interest for such Interest Period shall be such Minimum Interest Rate.
If the applicable Final Terms specify a Maximum Interest Rate for any Interest Period, then, in the event that the Rate of Interest
in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is greater than such
Maximum Interest Rate, the Rate of Interest for such Interest Period shall be such Maximum Interest Rate.
(iv) Determination of Rate of Interest and Calculation of Interest Amounts
The Agent will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of
Interest for the relevant Interest Period.
The Agent will calculate the amount of interest (the “Interest Amount”) payable on the Floating Rate Notes in respect of each
Calculation Amount for the relevant Interest Period.
Each Interest Amount shall be calculated by applying the Rate of Interest to each Calculation Amount, multiplying such sum by
the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency,
half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention.
“Day Count Fraction” means, in respect of the calculation of an amount of interest of any Interest Period:
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(A) if “Actual/Actual” or “Actual/Actual/ISDA” is specified in the applicable Final Terms, the actual number of days in the
Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of (A) the actual number
of days in that portion of the Interest Period falling in a leap year divided by 366 and (B) the actual number of days in that
portion of the Interest Period falling in a non-leap year divided by 365);
(B) if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by
365;
(C) if “Actual/360” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 360;
(D) if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period
divided by 360, calculated on a formula basis as follows:
Day Count Fraction = [360 × (Y(2) –Y(1))] + [30 × (M(2) – M(1))] + (D(2) – D(1))
360
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period
falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; “M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and “D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30; (E) if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period
divided by 360 calculated on a formula basis as follows:
Day Count Fraction = [360 × (Y(2) – Y(1))] + [30 × (M(2) – M(1))] + (D(2) – D(1))
360 where: “Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls; “Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; “M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and “D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D2 will be 30. (F) if “30E/360 (ISDA)” is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a
formula basis as follows:
Day Count Fraction = [360 × (Y(2) – Y(1))] + [30 × (M(2) – M(1))] + (D(2) – D(1))
360 where: “Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
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“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls; “M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and “D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D2 will be 30. (v) Notification of Rate of Interest and Interest Amounts
The Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the relevant Issuer and any stock exchange on which the relevant Floating Rate Notes are for the time being
listed and notice thereof to be published in accordance with Condition 13 as soon as possible after their determination but in no
event later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification
to such exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth London Business Day (as defined
below) after such determination. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or
appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening
of the Interest Period. Any such amendment will be promptly notified to each stock exchange, listing authority and/or quotation
system by which the relevant Floating Rate Notes are for the time being admitted to listing, trading and/or quotation and to the
Noteholders in accordance with Condition 13. In these Conditions “London Business Day” means a day (other than a Saturday or
a Sunday) on which banks and foreign exchange markets are open for business in London.
(vi) Determination or Calculation by Trustee
If for any reason the Agent at any time after the Issue Date defaults in its obligation to determine the Rate of Interest or the Agent
defaults in its obligation to calculate any Interest Amount in accordance with sub-paragraphs (ii) and (iv) above, the Trustee shall
determine the Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the foregoing
provisions of this Condition, but subject always to any minimum or maximum Rate of Interest specified in the applicable Final
Terms), it shall deem fair and reasonable in all the circumstances or, as the case may be, the Trustee shall calculate the Interest
Amount(s) in such manner as it shall deem fair and reasonable in all the circumstances and each such determination or calculation
shall be deemed to have been made by the Agent.
(vii) Certificates to be Final
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions of this Condition 4(b), whether by the Agent or the Trustee, shall (in the absence of
wilful default, bad faith or manifest error) be binding on the relevant Issuer, ZIC (where ZIC is not the relevant Issuer), the
Trustee, the Agent, the other Paying Agents, the Registrar and any Transfer Agents and all Noteholders and Couponholders and
(in the absence as aforesaid) no liability to the relevant Issuer, ZIC (where ZIC is not the relevant Issuer), the Noteholders or the
Couponholders shall attach to the Agent or the Trustee in connection with the exercise or non-exercise by it of its powers, duties
and discretions pursuant to such provisions.
(c) Accrual of Interest Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In
such event, interest will continue to accrue as provided in the Trust Deed.
(d) Special provisions in relation to Subordinated Notes
This Condition 4(d) is only applicable to Subordinated Notes:
(i) Optional deferral of interest
If so specified in the applicable Final Terms, there may be paid, on each Optional Interest Payment Date, interest accrued in
respect of the Interest Period which ends on such Optional Interest Payment Date but the relevant Issuer shall have the option to defer payment of interest on the Notes which would otherwise be payable on such date. If so specified in the applicable Final
Terms, notwithstanding the other provisions of this Condition 4(d)(i) but without prejudice to the provisions of Condition 4(d)(ii),
if as at any Optional Interest Payment Date FINMA or any Successor Authority no longer accords any regulatory capital credit to
the Notes under the Applicable Regulations (as defined below), the relevant Issuer will only be allowed to exercise its option
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under this Condition 4(d)(i) to defer payment of interest on the Notes on such Optional Interest Payment Date for a period of up to
five years (a “Fixed Term Deferred Interest Payment”). The deferral of any interest payment on any Optional Interest Payment
Date in accordance with this Condition 4(d)(i) will not constitute an Event of Default by the relevant Issuer and will not give
Noteholders or the Trustee any right to accelerate the Notes or make a demand under the relevant Subordinated ZIC Guarantee. The relevant Issuer, failing whom, the Guarantor, shall notify the Trustee and the Noteholders, immediately as soon as it becomes
aware that an Interest Payment Date will be an Optional Interest Payment Date in respect of which payment is deferred of the
amount of such payment otherwise due on that date and the grounds upon which such deferral has been made. The relevant Issuer
may defer paying interest on each Optional Interest Payment Date until the Notes become due and payable as described in
Condition 4(d)(iii).
For the purpose of this Condition 4(d), “Optional Interest Payment Date” means any Interest Payment Date in respect of which
during the six month period ending thereon, but subject as provided in the next paragraph, (i) no dividend has been declared or
paid on any class of share capital of ZIG; and (ii) (provided at the relevant time the existence of this requirement (ii) does not
cause a Regulatory Event) no interest, distribution or other payments (including payment for the purpose of a redemption or
repurchase) have been made on any securities issued (or guaranteed) by (a) ZIC as the relevant Issuer or Guarantor and the claims in respect of such securities or, as applicable, guarantee rank junior to, or pari passu with, the claims of holders of Subordinated
Notes issued by ZIC or, as applicable, under a ZIC Subordinated Guarantee or (b) ZIG (unless, in each case aforesaid, such
payment was compulsory on such securities or required due to the repayment of such securities).
Notwithstanding the immediately preceding paragraph, any Interest Payment Date which would otherwise not be an Optional
Interest Payment Date by reason of one or more of the following events shall be treated as an Optional Interest Payment Date:
(aa) repurchases, redemptions or other acquisitions of ZIG’s ordinary shares in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or
consultants, in connection with a dividend reinvestment or shareholder stock purchase plan or in connection with the
issuance of ZIG’s ordinary shares (or securities convertible into or exercisable for ZIG’s ordinary shares) as
consideration in an acquisition transaction entered into prior to the applicable deferral period;
(bb) as a result of any exchange or conversion of any class or series of ZIG’s ordinary shares (or any capital stock of any of its
subsidiaries) for any class or series of common stock or of any class or series of its indebtedness (or for the indebtedness
of any of its subsidiaries);
(cc) the purchase of fractional interests in ZIG’s ordinary shares, pursuant to the conversion or exchange provisions of such
ZIG’s ordinary shares, or the security being converted or exchanged;
(dd) any declaration of a dividend in connection with any shareholders’ rights plan, or the issuance of rights, stock or other
property under any shareholders’ rights plan, or the redemption or repurchase of rights pursuant thereto;
(ee) any dividend or distribution in the form of stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being
paid or ranks pari passu with or junior to such stock; or
(ff) payments of interest on any Subordinated Notes and any other obligations which rank pari passu with the Subordinated
Notes rateably and in proportion to the respective amounts as at such Interest Payment Date of (y) accrued and unpaid
interest on such other obligations, on the one hand, and (z) if applicable, Arrears of Interest and any other accrued and
unpaid interest on the Subordinated Notes, on the other hand.
(ii) Solvency Deferral of Interest
If Solvency Deferral is specified in the applicable Final Terms as being applicable and a Solvency Event has occurred and is continuing as at the relevant Deferral Determination Date, then, in relation to any Interest Payment which is otherwise scheduled
to be paid on an Interest Payment Date, the relevant Issuer shall defer such Interest Payment, and shall defer the relevant Solvency
Shortfall if, were the relevant Issuer to make payment of the relevant Interest Payment, a Solvency Event would as at the date of
such payment occur except that the relevant Issuer will not be required to defer such Interest Payment or Solvency Shortfall, as the
case may be, if FINMA or any Successor Authority applicable at the time has given its consent to such payment. The deferral of
any Interest Payment or part thereof in accordance with this Condition 4(d)(ii) will not constitute an Event of Default and will not
give Noteholders or the Trustee any right to accelerate the Notes or make a demand under the relevant Subordinated ZIC
Guarantee. The relevant Issuer, failing whom the Guarantor, shall give notice of such deferral to the Trustee (together with the
certificate of the occurrence of a Solvency Event referred to below), and to the Noteholders in accordance with Condition 13 not
less than seven days prior to the relevant Interest Payment Date. A certificate as to the occurrence of a Solvency Event signed by
two Authorised Officers of the relevant Issuer or ZIG, shall, in the absence of manifest error, be treated and accepted by the relevant Issuer, the Noteholders, the Trustee, the Couponholders and all other interested parties as correct and sufficient evidence
thereof. The Trustee shall be entitled to rely upon such certification absolutely without liability to any person.
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As used herein:
“Applicable Regulations” means, with respect to the Relevant Entity at any time, the regulatory capital requirements applicable
to such entity and/or its group at such time including, but not limited to, such insurance regulatory law (for group solvency or single solvency and/or financial conglomerate purposes, as applicable) and/or applicable generally recognised administrative
practice, if any, of FINMA or any Successor Authority.
“Assets” means, where ZIC is specified in the relevant Final Terms as being the Relevant Entity, ZIC’s consolidated total assets
and, where ZIG is specified in the relevant Final Terms as being the Relevant Entity, ZIG’s consolidated total assets, each as
shown in its latest annual audited balance sheet, but adjusted for all subsequent events, as reasonably determined by the Relevant
Entity, or if the Relevant Entity is being liquidated, its liquidator.
“Deferral Determination Date” means, in respect of an Interest Payment Date, the 20th business day in Zurich preceding such
Interest Payment Date.
“FINMA” means the Swiss Financial Market Supervisory Authority FINMA in Switzerland.
“Interest Payment” means, with respect to an Interest Payment Date, the interest scheduled to be paid on such Interest Payment
Date.
“Liabilities” means, where ZIC is specified in the applicable Final Terms as being the Relevant Entity, ZIC’s consolidated total
liabilities and, where ZIG is specified in the applicable Final Terms as being the Relevant Entity, ZIG’s consolidated total
liabilities, each as shown in its latest annual audited balance sheet, but adjusted for all subsequent events, as reasonably
determined by the Relevant Entity, or if the Relevant Entity is being liquidated, its liquidator.
“Relevant Entity” means ZIC and/or ZIG, as specified in the applicable Final Terms.
A “Solvency Event” shall be deemed to have occurred as at any date if as at such date:
(i) the Relevant Entity does not at such date have appropriate funds to cover the required minimum solvency margin or meet
any other required level of own funds regulatory capital (or another applicable term in case of a change in Applicable
Regulations) in accordance with Applicable Regulations and a deferral or, as applicable, cancellation of interest is required
under the Applicable Regulations; or
(ii) the Relevant Entity is unable to pay its debts owed to its Senior Creditors (as defined in Condition 2(c)) as they fall due; or
(iii) the Relevant Entity’s Assets do not exceed its Liabilities (each as defined above) (other than liabilities to persons who are
not Senior Creditors); or
(iv) FINMA or a Successor Authority has given (and not withdrawn) notice to the Relevant Entity that it has determined, in view
of the financial and/or capital position of the Relevant Entity, that in accordance with Applicable Regulations at such time,
the relevant Issuer must take specified action in relation to payments on the Notes; or
(v) the Relevant Entity’s auditors cannot give a confirmation pursuant to Article 725(2) of the Swiss Code of Obligations or any
equivalent provision under applicable laws.
“Solvency Shortfall” means the portion of interest that would cause a Solvency Event to occur or be continuing.
“Successor Authority” means any domestic or foreign successor to FINMA or otherwise that has primary supervisory authority
over ZIC and/or the Zurich Insurance Group.
(iii) Arrears of Interest
Any interest in respect of the Notes not paid on an Interest Payment Date (including any Solvency Shortfall), together with any
other interest in respect thereof not paid on any earlier Interest Payment Date, in each case by virtue of this Condition 4(d), shall,
so long as the same remains unpaid, constitute “Arrears of Interest”. Arrears of Interest and any other amount, payment of which
is deferred in accordance with this Condition 4(d), shall not themselves bear interest. Any Arrears of Interest and any other
amount, payment of which is deferred in accordance with this Condition 4(d) may, if so specified in the applicable Final Terms
and subject to obtaining the prior written approval of FINMA or any Successor Authority (if such approval is required under
Applicable Regulations at the relevant time), be satisfied at the option of the relevant Issuer in whole or in part, at any time upon
the expiry of not less than 15 nor more than 30 days’ notice to such effect given by the relevant Issuer or the Guarantor to the Trustee and to the Noteholders in accordance with Condition 13 and in any event such Arrears of Interest and any other amount
payment of which is deferred in accordance with this Condition 4(d) will, save as otherwise specified in the applicable Final
Terms and as provided below, automatically become immediately due and payable upon the earliest of the following dates:
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(A) the date upon which a dividend is next declared or paid on any class of share capital of ZIG; or
(B) the date of redemption, substitution or variation of any Notes pursuant to Condition 6(a), Condition 6(c), Condition 6(d),
Condition 6(e) or Condition 6(f); or
(C) the commencement of the winding-up or dissolution of the relevant Issuer or, as the case may be, the Guarantor (except for
the purposes of or pursuant to and followed by a consolidation, amalgamation, merger or a reconstruction the terms of which
shall have previously been approved in writing by the Trustee or by an Extraordinary Resolution of Noteholders or as a
result of a Permitted Reorganisation); or
(D) the date upon which the relevant Issuer or, as the case may be, the Guarantor pays interest on any other junior or pari passu
securities of the relevant Issuer or the Guarantor (unless such payment was compulsory on such securities or required due to
the repayment of such securities); or
(E) in the case of a Fixed Term Deferred Interest Payment only, the fifth anniversary of the Optional Interest Payment Date on which such payment was deferred.
Notwithstanding the foregoing, Arrears of Interest arising pursuant to Condition 4(d)(ii) will only be due and payable by reason of
items (A) and (D) above following the prior written approval of FINMA or any Successor Authority (if such approval is required
under Applicable Regulations at the relevant time) and provided the relevant dividend or interest payment under item (A) or (D) is
not one of a type described in paragraphs (aa) to (ff) in Condition 4(d)(i).
5. Payments
(a) Method of Payment
Subject as provided below:
(i) payments in a Specified Currency other than euro will be made by transfer to an account in the relevant Specified Currency
maintained by the payee with, or by a cheque in such Specified Currency drawn on, a bank in the principal financial centre
of the country of such Specified Currency (which, if the Specified Currency is New Zealand dollars, shall be Auckland); and
(ii) payments in euro will be made by credit or transfer to an euro account specified by the payee.
Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto in any jurisdiction (whether by
operation of law or agreement of the relevant Issuer or the Guarantor or its Agents and neither the relevant Issuer nor the
Guarantor will be liable for any taxes or duties of whatever nature imposed or levied by such laws, regulations, directives or
agreements), but without prejudice to the provisions of Condition 7. References to “Specified Currency” will include any successor currency under applicable law.
(b) Presentation of Notes and Coupons
Payments of principal in respect of Definitive Bearer Notes will (subject as provided below) be made in the manner provided in
Condition 5(a) above only against presentation and surrender (or, in the case of part payment only, endorsement) of Definitive
Bearer Notes, and payments of interest in respect of Definitive Bearer Notes will (subject as provided below) be made as aforesaid
only against presentation and surrender (or, in the case of part payment only, endorsement) of Coupons, in each case at the
specified office of any Paying Agent outside the U.S. (which expression, as used herein, means the United States of America
(including the States and the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)).
Fixed Rate Notes in definitive bearer form (other than Long Maturity Notes (as defined below)) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be
issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment
not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum
due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned
above against presentation and surrender (or, in the case of part payment only, endorsement) of the relative missing Coupon at any
time before the expiry of 10 years after the Relevant Date (as defined in Condition 7) in respect of such principal (whether or not
such Coupon would otherwise have become void under Condition 8) or, if later, five years from the date on which such Coupon
would otherwise have become due, but in no event thereafter.
Upon any Fixed Rate Note becoming due and repayable, all unmatured Talons (if any) appertaining hereto will become void and
no further Coupons will be issued in respect thereof.
Upon the date on which any Floating Rate Note or Long Maturity Note (as defined below) in definitive bearer form becomes due
and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no
payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. Where any such Definitive Bearer
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Note is presented for redemption without all unmatured Coupons or Talons relating to it, redemption shall be made only against
the provision of such indemnity as the relevant Issuer may require. A “Long Maturity Note” is a Fixed Rate Note (other than a
Fixed Rate Note which on issue had a Talon attached) whose nominal amount on issue is less than the aggregate interest payable
thereon provided that such Definitive Bearer Note shall cease to be a Long Maturity Note on the Fixed Interest Date on which the aggregate amount of interest remaining to be paid after that date is less than the nominal amount of such Note.
If the due date for redemption of any Definitive Bearer Note is not a Fixed Interest Date or an Interest Payment Date, interest (if
any) accrued in respect of such Definitive Bearer Note from (and including) the preceding Fixed Interest Date or Interest Payment
Date or, as the case may be, the Interest Commencement Date shall be payable only against presentation and surrender (or, in the
case of part payment only, endorsement) of the relevant Definitive Bearer Note.
Payments of principal and interest (if any) in respect of Notes represented by any Bearer Global Note will (subject as provided
below) be made in the manner specified above in relation to Definitive Bearer Notes and otherwise in the manner specified in the
relevant Bearer Global Note against presentation or surrender, as the case may be, of such Bearer Global Note at the specified
office of any Paying Agent outside the U.S.. A record of each payment made against presentation or surrender of such Bearer Global Note, distinguishing between any payment of principal and any payment of interest, will be made on such Bearer Global
Note by such Paying Agent and such record shall be prima facie evidence that the payment in question has been made.
The holder of a Bearer Global Note shall be the only person entitled to receive payments in respect of Notes represented by such
Bearer Global Note and the relevant Issuer or, as the case may be, ZIC will be discharged by payment to, or to the order of, the
holder of such Bearer Global Note in respect of each amount so paid.
Notwithstanding the foregoing, if any amount of principal and/or interest in respect of this Bearer Global Note is payable in U.S.
dollars, such U.S. dollar payments of principal and/or interest in respect of this Bearer Global Note will be made at the specified
office of a Paying Agent in the U.S. if:
(i) the relevant Issuer and ZIC (where ZIC is not the relevant Issuer) have appointed Paying Agents with specified offices outside the U.S. with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at
such specified offices outside the U.S. of the full amount of principal and interest on the Notes in the manner provided above
when due;
(ii) payment of the full amount of such principal and interest at all such specified offices outside the U.S. is illegal or effectively
precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S.
dollars; and
(iii) such payment is then permitted under U.S. law without involving, in the opinion of the relevant Issuer and ZIC (where ZIC
is not the relevant Issuer), adverse tax consequences to the relevant Issuer or ZIC (where ZIC is not the relevant Issuer).
Payments of principal in respect of Registered Notes (whether in individual or global form) will be made in the manner provided
in Condition 5(a), above against presentation and surrender (or, in the case of part payment of any sum due only, endorsement) of
such Registered Global Note or Individual Registered Notes at the specified office of the Registrar or at the specified office of any
Paying Agent. Payments of interest due on a Registered Note will be made to the person in whose name such Note is registered (i)
where in global form, at the close of business on the Clearing System Business Day immediately prior to the date for payment,
where Clearing System Business Days means Monday to Friday inclusive except 25 December and 1 January, and (ii) where in
individual form, at the close of business on the fifteenth day (whether or not such fifteenth day is a business day (being for the
purpose a day on which banks are open for business in the city where the specified office of the Registrar is located) (the “Record Date”)). In the case of payments by cheque, cheques will be mailed to the holder (or the first named of joint holders) at such
holder’s registered address on the due date. If payment is required by credit or transfer as referred to in Condition 5(a) above,
application for such payment must be made by the holder to the Registrar not later than the relevant Record Date.
(c) Payment Day
If the date for payment of any amount in respect of any Note or Coupon is not a Payment Day, the holder thereof shall not be
entitled to payment of the amount due until the next following Payment Day in the relevant place and shall not be entitled to
further interest or other payment in respect of such delay. For these purposes, and unless otherwise specified in the applicable
Final Terms, “Payment Day” means any day which is:
(i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business
(including dealing in foreign exchange and foreign currency deposits) in any Payment Business Centre specified in the
applicable Final Terms and, in the case of Notes in individual form only, in the relevant place of presentation; and
(ii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and
foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and
foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (if other than the
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place of presentation, any Additional Business Centre) or (2) in relation to Notes denominated or payable in euro, a day on
which the TARGET system is operating.
(d) Interpretation of Principal and Interest
Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:
(i) any additional amounts which may be payable with respect to principal under Condition 7 or pursuant to any undertaking
given in addition thereto or in substitution therefor pursuant to the Trust Deed;
(ii) the Final Redemption Amount (as specified in the applicable Final Terms) of the Notes; (iii) the Early Redemption Amount (as specified in the applicable Final Terms) of the Notes; (iv) the Optional Redemption Amount(s) (as specified in the applicable Final Terms) (if any) of the Notes; (v) in relation to Zero Coupon Notes, the Amortised Face Amount (as specified in the applicable Final Terms); and (vi) any premium and any other amounts which may be payable by the relevant Issuer under or in respect of the Notes. Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 7 or pursuant to any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed.
(e) Payments on Listed Swiss Franc Notes The receipt by the Principal Paying Agent named in the applicable Final Terms (the “Principal Paying Agent”) from the relevant Issuer of each payment in full of principal and/or interest then due in respect of any Listed Swiss Franc Notes at the time and in the manner specified in the agency agreement appointing the Principal Paying Agent to act as such in relation to the Listed Swiss Franc Notes shall (except to the extent that such payment is avoided or set aside for any reason) satisfy the obligation of the relevant Issuer under such Notes to make such payment on such date and shall (except as aforesaid) release it from all further obligations in respect of such payment.
(f) Definition In this Condition, “euro” means the single currency adopted by those states participating in European Monetary Union from time to time.
6. Redemption and Purchase
(a) At Maturity This Condition 6(a) is applicable to Notes other than Undated Subordinated Notes. Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed by the relevant Issuer at its Final Redemption Amount specified in the applicable Final Terms in the relevant Specified Currency on the Maturity Date provided that, in the case of Dated Subordinated Notes if so specified in the applicable Final Terms, if a Solvency Event has occurred and is continuing on the Maturity Date or would occur as a result of the relevant redemption, the Dated Subordinated Notes shall not be redeemed unless the prior written approval of FINMA or any Successor Authority for such payment has been given. If a Solvency Event has occurred and is continuing on the Maturity Date and no prior written approval as aforesaid has been given, each Dated Subordinated Note will be redeemed by the relevant Issuer promptly following either the obtaining of such written approval or no Solvency Event continuing (including, following the relevant redemption) and the giving of not more than 30 nor less than 15 days’ notice to such effect by the relevant Issuer to the Trustee and to Noteholders in accordance with Condition 13. References herein to “Maturity Date” shall be construed accordingly to refer to such later date of redemption and, for the avoidance of doubt, interest shall continue to accrue (without compounding) as provided in Condition 4 on any such Dated Subordinated Note until such later date of redemption. A certificate as to the occurrence and/or continuation of a Solvency Event and as to whether or not written approval of FINMA or any Successor Authority as aforesaid has been given signed by two Authorised Officers of the relevant Issuer or ZIG, shall, in the absence of manifest error be treated and accepted by the relevant Issuer, to Noteholders, the Trustee, the Couponholders and all other interested parties as correct and sufficient evidence thereof. The Trustee shall be entitled to rely upon such certification absolutely without liability to any person.
(b) Redemption of Undated Subordinated Notes This Condition 6(b) is only applicable to Undated Subordinated Notes. Each Note has no final maturity date and is only redeemable or repayable in accordance with the following provisions of this Condition 6 and Condition 9(b).
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(c) Redemption for Tax Reasons
The Notes of any Series may be redeemed at the option of the relevant Issuer, subject to Condition 6(l), in whole, but not in part, at any time (if this Note is not a Floating Rate Note) or on any Interest Payment Date (if this Note is a Floating Rate Note) at their
principal amount, together, if applicable, with interest accrued to the date fixed for redemption and any Arrears of Interest, on
giving not less than 30 nor more than 60 days’ notice to the Trustee and the Agent and, in accordance with Condition 13, the
Noteholders (which notice shall be irrevocable), if the Issuer satisfies the Trustee immediately before the giving of such notice
that:
(i) on the occasion of the next payment due under the Notes, (A) the relevant Issuer is or will become obliged to pay additional
amounts as provided or referred to in Condition 7 or (B) ZIC (where ZIC is not the relevant Issuer) would be unable for
reasons outside its control to procure payment by the relevant Issuer and in making payment itself would be required to pay
such additional amounts, in each of cases (A) and (B) as a result of (1) any current law (in the case of an issue of Undated
Subordinated Notes) or (2) (in the case of an issue of Senior Notes, Dated Subordinated Notes or Undated Subordinated Notes) change in, or amendment to, the laws or regulations of the Relevant Jurisdictions (as defined below) or any political
subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation
of such laws or regulations, which change or amendment becomes effective on or after the Issue Date of the first Tranche of
the Notes of the relevant Series; and such obligation cannot be avoided by the relevant Issuer or, as the case may be, ZIC
(where ZIC is not the relevant Issuer) taking reasonable measures available to it, provided that no such notice of redemption
shall be given earlier than 90 days prior to the earliest date on which the relevant Issuer or, as the case may be, ZIC (where
ZIC is not the relevant Issuer) would be obliged to pay such additional amounts were a payment in respect of the Notes then
due; or
(ii) on the next Interest Payment Date the payment of interest in respect of any Undated Subordinated Notes would (whether or
not as a result of a change in or amendment of law or regulation as aforesaid) (i) in the case of Notes issued by ZF (UK), be
treated as a “distribution” within the meaning of the UK Corporation Tax Act 2010 (as amended, re-enacted or replaced) or (ii) not be deductible as an expense for tax purposes of the relevant Issuer, in each case for reasons outside the control of and
which cannot be avoided by, the relevant Issuer taking reasonable measures available to it.
Prior to the publication of any notice of redemption pursuant to this Condition, the relevant Issuer shall deliver to the Trustee a
certificate signed by two Authorised Officers of the relevant Issuer or, as the case may be, two Authorised Officers of ZIC (where
ZIC is not the relevant Issuer) stating that the relevant Issuer is entitled to effect such redemption and setting forth a statement of
facts showing that the conditions precedent to the right of the relevant Issuer so to redeem have occurred, and an opinion of
independent legal advisers of recognised standing to the effect that the relevant Issuer or, as the case may be, ZIC (where the
relevant Issuer is not ZIC), has or will become obliged to pay such additional amounts as a result of such circumstances, change or
amendment and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions
precedent set out above, in which event it shall be conclusive and binding on the Noteholders and the Couponholders.
In these Conditions, “Relevant Jurisdiction” means (i) Luxembourg and Switzerland, in the case of Notes issued by ZF
(Luxembourg), (ii) Switzerland, in the case of Notes issued by ZIC; and, (iii) United Kingdom and Switzerland, in the case of
Notes issued by ZF (UK).
Notes redeemed pursuant to this Condition 6(c) will be redeemed at their Early Redemption Amount referred to in
Condition 6(h) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.
(d) Redemption for Other Reasons This Condition 6(d) is only applicable to Subordinated Notes. The Notes may, subject to Condition 6(l), be redeemed at the option of the relevant Issuer in whole, but not in part, at any time (if this Note is not a Floating Rate Note) or on any Interest Payment Date (if this Note is a Floating Rate Note) (provided that the relevant Issuer shall not have the right to redeem the Notes following an Accounting Event and/or a Capital Event (each as defined below) if such right of redemption would cause a Regulatory Event) at the Regular Redemption Price or the Special Redemption Price, as specified in the applicable Final Terms, together, if applicable, with interest accrued to the date fixed for redemption and any Arrears of Interest on giving not less than 30 nor more than 60 days’ notice to the Trustee and, in accordance with Condition 13, the Noteholders (which shall be irrevocable), if the relevant Issuer satisfies the Trustee immediately before the giving of such notice that: (i) if so specified in the applicable Final Terms, an Accounting Event has occurred and is continuing; (ii) if so specified in the applicable Final Terms, a Capital Event has occurred and is continuing; or (iii) if so specified in the applicable Final Terms, a Regulatory Event has occurred and is continuing.
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As used herein: “Accounting Event” means that an opinion of a recognised accounting firm has been delivered to the Issuer, stating that obligations of the Issuer in respect of the Notes must not or must no longer be recorded under the Initial Accounting Treatment Methodology specified in the applicable Final Terms (either “liabilities” or “equity”), (being the presentation of the Notes under IFRS as at the Issue Date) on the balance sheet of ZIG published in its annual consolidated financial statements pursuant to IFRS and this cannot be avoided by the Issuer or, as the case may be, ZIG taking such reasonable measures as the Issuer or ZIG (acting in good faith) deems appropriate. The Issuer will deliver the applicable opinion to the Trustee. “Capital Event” means a change by a nationally recognised statistical rating organisation to its equity credit criteria, or the interpretation or application thereof, for securities such as the Notes, as such criteria are in effect on the Issue Date (the “current criteria”), which change has been confirmed in writing to the relevant Issuer or ZIC by such organisation and which results in a lower equity credit being given to the Notes as of the date of such change by such nationally recognised statistical rating organisation as compared with the equity credit pursuant to its current criteria. “Future Regulations” means the solvency margin, regulatory capital or capital adequacy regulations (if any) which may be introduced in Switzerland (or if ZIG becomes domiciled for regulatory purposes in a jurisdiction other than Switzerland, such other jurisdiction) and which are applicable to the relevant Issuer and/or ZIG, which would set out the requirements to be satisfied by financial instruments in order that they be eligible to be included in Tier Two (or equivalent) own funds regulatory capital. “Regulatory Event” means the occurrence of any of the following events which occurrence cannot be avoided by the relevant Issuer or the Guarantor or ZIG taking such reasonable measures as they (acting in good faith) deem appropriate: (A) prior to the implementation of the Future Regulations, FINMA or any Successor Authority states that the Notes are no longer
eligible to qualify as at least lower additional capital (in the case of Dated Subordinated Notes) or upper additional capital (in the case of Undated Subordinated Notes) pursuant to Art. 49 in connection with Art. 39 of the SPICO (as defined below), and no longer fulfil the requirements for such category, or equivalent thereof, for group or solo solvency purposes; or
(B) with effect from the implementation of the Future Regulations, the Notes do not qualify, or initially qualify but cease to so
qualify, as at least Tier Two own funds (or equivalent) under such Future Regulations (or an official application or interpretation of those regulations including a decision of a court or tribunal),
save, in each case above, where such non-qualification thereof applicable to the Notes is only as a result of any applicable limitation on the amount of such capital. “SPICO” means the Ordinance on the Supervision of Private Insurance Companies (Verordnung über die Beaufsichtigung von privaten Versicherungsunternehmen — AVO) of 9 November 2005, as amended. “Special Event” means any of an Accounting Event, a Capital Event or a Regulatory Event or any combination of the foregoing. Prior to the publication of any notice of redemption pursuant to this Condition, the relevant Issuer shall deliver to the Trustee a certificate signed by two Authorised Officers of the relevant Issuer stating that the circumstances described in the definitions of Accounting Event, Capital Event or Regulatory Event (as appropriate) have occurred and that, in the case of a Regulatory Event, such Regulatory Event cannot be avoided by the Issuer, Guarantor or, as the case may be, ZIG taking such measures as are provided for in the definition of Regulatory Event to avoid such Regulatory Event and the Trustee shall be entitled to accept such certificate as sufficient evidence that the circumstances described in the relevant Special Event apply, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. In the case of a Capital Event, prior to the publication of any notice of redemption, the relevant Issuer shall also deliver a copy of the relevant written confirmation of the rating organisation referred to in the definition of Capital Event. The Trustee is under no obligation to ascertain whether any Special Event or any event which could lead to the occurrence of, or could constitute, any such Special Event, has occurred and, until it shall have actual knowledge or notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no such Special Event has occurred.
(e) Redemption at the Option of the Relevant Issuer
If the relevant Issuer is specified in the applicable Final Terms as having an option to redeem, such Issuer may, subject to
Condition 6(l) and having given:
(i) not less than 15 nor more than 30 days’ notice to the Noteholders in accordance with Condition 13; and
(ii) not less than 15 days before the giving of the notice referred to in (i), notice to the Trustee and the Agent;
(which notices shall be irrevocable), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and
at the Optional Redemption Amount(s) specified in the applicable Final Terms together, if appropriate, with interest accrued to
(but excluding) the relevant Optional Redemption Date. Any such redemption must be of a nominal amount not less than the
Minimum Redemption Amount or not more than the Maximum Redemption Amount, in each case as may be specified in the
applicable Final Terms. In the case of a partial redemption of Notes, the Notes to be redeemed (“Redeemed Notes”) will be
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selected individually by lot in a manner approved by the Trustee, in the case of Redeemed Notes represented by Definitive Notes,
and in accordance with the rules of Euroclear and/or Clearstream, Luxembourg, in the case of Redeemed Notes represented by a
Global Note, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the
“Selection Date”). In the case of Redeemed Notes represented by Definitive Bearer Notes or Individual Registered Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 13 not less than 15 days prior to the
date fixed for redemption. The aggregate nominal amount of Redeemed Notes represented by Definitive Bearer Notes or
Individual Registered Notes shall bear the same proportion to the aggregate nominal amount of all Redeemed Notes as the
aggregate nominal amount of Definitive Bearer Notes or Individual Registered Notes outstanding bears to the aggregate nominal
amount of the Notes outstanding, in each case on the Selection Date, provided that such first mentioned nominal amount shall, if
necessary, be rounded downwards to the nearest integral multiple of the Specified Denomination, and the aggregate nominal
amount of Redeemed Notes represented by a Global Note shall be equal to the balance of the Redeemed Notes. No exchange of
the relevant Global Note will be permitted during the period from and including the Selection Date to and including the date fixed
for redemption pursuant to this Condition 6(e) and notice to that effect shall be given by the relevant Issuer to the Noteholders in
accordance with Condition 13 at least five days prior to the Selection Date. (f) Substitution or Variation This Condition 6(f) is only applicable to Subordinated Notes. If any of the events described in Condition 6(c) or 6(d) has occurred and is continuing, then the relevant Issuer may, subject to Condition 6(l), (without any requirement for the consent or approval of the Noteholders) and subject to having satisfied the Trustee immediately prior to the giving of such notice referred to herein that the provisions of this Condition 6(f) have been complied with and having given not less than seven days’ written notice to the Trustee and, in accordance with Condition 13, the Noteholders (which notice shall be irrevocable), at any time either substitute all (but not some only) of the Notes for, or vary the terms of the Notes so that they remain or, as appropriate, become, Qualifying Securities and the Trustee shall (subject as provided below and to the following provision of this Condition 6(f) being complied with and subject further to the receipt by the Trustee of a certification by the Authorised Officers of the relevant Issuer referred to below) agree to such substitution or variation. In connection therewith, all Arrears of Interest (if any) will be paid. Upon the expiry of such notice, the relevant Issuer shall either vary the terms of, or substitute, the Notes in accordance with this Condition 6(f), as the case may be. The Trustee shall not be obliged to participate in any substitution or variation of the Notes for any proposed alternative Qualifying Securities if the terms of the proposed alternative Qualifying Securities would impose, in the Trustee’s opinion, more onerous obligations on it.
As used herein, “Qualifying Securities” means securities:
(a) having terms (including terms providing for deferral and/or cancellation of payment of interest and/or principal) that are not
materially less favourable to an investor than the terms of the Notes (as reasonably determined by the relevant Issuer after
consulting an independent investment bank of international standing, and provided that a certification to such effect of two
Authorised Officers of the relevant Issuer shall have been delivered to the Trustee prior to the issue of the relevant
securities); and
(b) issued by the relevant Issuer or issued by another member of the Zurich Insurance Group with a guarantee by the relevant
Issuer and, as appropriate, Guarantor, such that investors have the same material rights and claims as provided by the Notes
(as reasonably determined by the relevant Issuer, and provided that a certification to such effect of two Authorised Officers
shall have been delivered to the Trustee prior to the issue of the relevant securities); and
(c) ranking at least equal to the Notes and featuring the same principal amount, interest rate (including applicable margins and
step-up), Interest Payment Dates and Optional Redemption Dates as the Notes; and
(d) containing terms which preserve the obligations (including the obligations arising from the exercise of any right) of the
relevant Issuer as to redemption of the Notes, including (without limitation) as to timing of and amounts payable on, such
redemption; and
(e) which do not contain any terms providing for loss absorption through principal write-down or conversion to ordinary shares,
unless the triggers are objective and measurable; and
(f) which, benefit from a guarantee from ZIC which is subordinated on the same basis, and to the same extent, as the
Subordinated ZIC Guarantee in circumstances where the Notes benefitted from the Subordinated ZIC Guarantee; and
(g) listed on an internationally recognised stock exchange, if the Notes were listed prior to such substitution or variation.
In addition, any substitution or variation is subject to (A) all interest amounts, including Arrears of Interest, and any other amount
payable under the Notes which, in each case has accrued to Noteholders and has not been paid, being satisfied in full on or prior to the date thereof; (B) compliance with Condition 6(l); (C) the substitution or variation not itself giving rise to a change in any
published rating of the Notes in effect at such time as confirmed in writing by the rating organisations who have given such
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published rating of the Notes previously; (D) the substitution or variation not triggering the right on the part of the relevant Issuer
to redeem the Notes pursuant to Condition 6(c) or 6(d); and (E) certification by two Authorised Officers of the relevant Issuer that
the securities in question are “Qualifying Securities” in accordance with the definition set out above and that the conditions set
out herein have been complied with, which such certificate shall be delivered to the Trustee prior to the substitution or variation of the relevant securities and upon which certificate the Trustee shall be entitled to rely absolutely without liability to any person.
In connection with any substitution or variation as described above, the relevant Issuer will comply with the rules of any stock
exchange or other relevant authority on which the Notes are then listed or admitted to trading.
(g) Redemption at the Option of the Noteholders
This Condition 6(g) is only applicable to Senior Notes.
If the Noteholders are specified in the applicable Final Terms as having an option to redeem, upon the holder of any Note giving
to the relevant Issuer in accordance with Condition 13 not less than 15 nor more than 30 days’ notice the relevant Issuer will, upon the expiry of such notice, redeem, subject to, and in accordance with, the terms specified in the applicable Final Terms, in whole
(but not in part), such Note on the Optional Redemption Date and at the Optional Redemption Amount together, if appropriate,
with interest accrued to (but excluding) the Optional Redemption Date.
If a Note is in individual or definitive form, to exercise the right to require redemption of such Note the holder of the Note must
deliver such Note in individual or definitive form at the specified office of any Paying Agent at any time during normal business
hours of such Paying Agent falling within the notice period, accompanied by a duly completed and signed notice of exercise in the
form (for the time being current) obtainable from any specified office of any Paying Agent (a “Put Notice”) and in which the
holder must (subject to the terms of Condition 5) specify a bank account (or, if payment is by cheque, an address) to which
payment is to be made under this Condition.
The Paying Agent with which a Note in individual or definitive form is so deposited shall deliver a duly completed receipt for such Note (a “Put Option Receipt”) to the depositing Noteholder. No Definitive Note, once deposited with a duly completed Put
Option Notice in accordance with this Condition 6(g), may be withdrawn; provided, however, that if, prior to the relevant
Optional Redemption Date, any such Note in individual or definitive form becomes immediately due and payable or, upon due
presentation of any such Note on the relevant Optional Redemption Date, payment of the redemption moneys is improperly
withheld or refused, the Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have
been given by such Noteholder in the relevant Put Notice and shall hold such Note in individual or definitive form at its specified
office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any
outstanding Note in individual or definitive form is held by a Paying Agent in accordance with this Condition 6(g), the depositor
of such Note in individual or definitive form and not such Paying Agent shall be deemed to be the holder of such Note for all
purposes.
If a Note is in global form, the Noteholder shall comply with the procedures of the relevant Clearing System so as to enable such
Clearing System to procure the giving of a Put Notice as provided by this Condition 6(g).
(h) Early Redemption Amounts For the purpose of Condition 6(c) above and Condition 9, the Notes will be redeemed at the Early Redemption Amount calculated as follows: (i) in the case of Notes with a Final Redemption Amount equal to the Issue Price, at the Final Redemption Amount thereof; (ii) in the case of Notes (other than Zero Coupon Notes) with a Final Redemption Amount which is or may be less or greater
than the Issue Price or which is payable in a Specified Currency other than that in which the Notes are denominated, at the amount specified in, or determined in the manner specified in, the applicable Final Terms or, if no such amount or manner is so specified in the applicable Final Terms, at their nominal amount; or
(iii) in the case of Zero Coupon Notes, at an amount (the “Amortised Face Amount”) equal to the sum of:
(a) the Reference Price specified in the applicable Final Terms; and (b) the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the
Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable.
Where such calculation is to be made for a period which is not a whole number of years, it shall be made on the basis of a 360 day year consisting of 12 months of 30 days each or such other calculation basis as may be specified in the applicable Final Terms.
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(i) Purchases The relevant Issuer, ZIC (where ZIC is not the relevant Issuer) or any of ZIC’s Subsidiaries (as such term is defined in the Trust Deed) may subject to Condition 6(l), in the case of Restricted Notes subject to Condition 10(l), at any time purchase Notes (provided that, in the case of definitive Bearer Notes, all unmatured Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. Such Notes may be held, resold or, at the option of the relevant Issuer or ZIC (where ZIC is not the relevant Issuer), surrendered to any Paying Agent or the Registrar for cancellation.
(j) Cancellation All Notes which are redeemed or purchased and surrendered for cancellation will forthwith be cancelled (together, in the case of Definitive Bearer Notes, with all unmatured Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled (together in the case of Definitive Bearer Notes with all unmatured Coupons and Talons cancelled therewith) shall be forwarded to the Agent and cannot be reissued or resold.
(k) Late payment on Zero Coupon Notes If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to Condition 6(a), (c), (d), (e) or (g) above or upon its becoming due and repayable as provided in Condition 9 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in Condition 6(h)(iii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of: (i) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and
(ii) five days after the date on which the full amount of the moneys payable has been received by the Agent or the Trustee and
notice to that effect has been given to the Noteholders in accordance with Condition 13.
(l) Condition to redemption, substitution or variation of Subordinated Notes
Any redemption, substitution, variation of the terms or purchase of Subordinated Notes in accordance with Condition 6(c), (d),
(e), (f) or (i) is subject to the relevant Issuer obtaining the prior written consent of FINMA or any Successor Authority thereto
provided that such consent is required at that time under applicable capital or solvency regulations to be obtained.
7. Taxation
(a) Notes issued by ZF (Luxembourg) or ZF (UK)
In the case of Notes issued by ZF (Luxembourg) or ZF (UK), all payments under the Trust Deed, the Notes and the Coupons will
be made without withholding or deduction for or on account of any taxes or duties of whatever nature imposed or levied by or on behalf of the Relevant Jurisdiction or any political subdivision or any authority thereof or therein having power to tax or required
pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) unless such
withholding or deduction is required by law and/or by agreement of the relevant Issuer or the Guarantor, as the case may be. In
such event, ZF (Luxembourg) or ZF (UK), as the case may be, will pay such additional amounts (“Additional Amounts”) as
shall be necessary in order that the net amounts received by the holders of the Notes or Coupons after such withholding or
deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of
the Notes or Coupons, as the case may be, in the absence of such withholding or deduction; except that no such Additional
Amounts shall be payable with respect to any Note or Coupon presented for payment:
(i) in Luxembourg, in the case of Notes issued by ZF (Luxembourg);
(ii) by or on behalf of a Noteholder or Couponholder who is liable for such taxes or duties in respect of such Note or Coupon by
reason of his having some connection with the United Kingdom (in the case of ZF (UK)) or Luxembourg (in the case of ZF
(Luxembourg) or Switzerland (in the case of payments made by ZIC) other than the mere holding of such Note or Coupon;
(iii) more than 30 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been
entitled to an Additional Amount on presenting the same for payment on such thirtieth day;
(iv) in respect of any U.S. federal withholding tax that is imposed, assessed, levied or collected by reason of Section 1471
through 1474 of the Code (or any regulations promulgated thereunder or administrative interpretations thereof or agreement
with any Relevant Jurisdiction or the U.S. relating thereto);
(v) where such withholding or deduction is imposed on a payment to an individual or a residual entity and (x) is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the
ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or
complying with, or, introduced in order to conform to, such Directive or (y) is required to be made pursuant to any
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agreements between the European Community and other countries or territories providing for measures equivalent to those
laid down in the European Council Directive 2003/48/EC , including, but not limited to, the agreement between the
European Community and the Confederation of Switzerland dated as of 26 October 2004, or any law or other governmental
regulation implementing or complying with, or introduced in order to conform to, such agreements or (z) is required to be made on a payment to an individual resident in Luxembourg in accordance with the provisions of the Luxembourg law dated
23 December 2005 introducing a withholding tax on interest paid to such Luxembourg resident individual;
(vi) where such withholding or deduction is imposed on a payment and is required to be made pursuant to laws enacted by
Switzerland providing for the taxation of payments according to principles similar to those laid down in the draft legislation
proposed by the Swiss Federal Council on 24 August 2011, in particular the principle to have a person other than the Issuer
withhold or deduct the tax, including, without limitation, any paying agent;
(vii) where such withholding or deduction is required to be made pursuant to any agreements between Switzerland and other
countries on final withholding taxes (internationale Quellensteuern) levied by a paying agent in respect of an individual
resident in the other country on interest or capital gain paid, or credited to an account, relating to a Note; or
(viii) by or on behalf of a Noteholder or Couponholder who would have been able to avoid such withholding or deduction by
presenting the relevant Note or Coupon to another Paying Agent in a member state of the EU.
As used herein, the “Relevant Date” means the date on which such payment first becomes due, except that, if the full amount of
the moneys payable has not been duly received by the Agent or the Trustee on or prior to such due date, it means the date on
which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in
accordance with Condition 13.
(b) Notes issued by ZIC
In the case of Notes issued by ZIC, all payments of principal and interest in respect of the Notes and Coupons issued by ZIC will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental
charges of whatever nature imposed or levied by or on behalf of the Relevant Jurisdiction or any political subdivision thereof or
any authority therein or thereof having power to tax or required pursuant to an agreement described in Section 1471(b) of the U.S.
Internal Revenue Code of 1986 (the “Code”) unless such withholding or deduction is required by law and/or by agreement of the
Issuer or the Guarantor, as the case may be. In the event that ZIC or any person acting on its behalf is required by law to make any
such withholding or deduction, ZIC will pay such additional amounts as shall be necessary in order that the net amounts received
by the holders of the Notes or Coupons after such withholding or deduction shall equal the respective amounts of principal and
interest which would otherwise have been receivable in respect of the Notes or Coupons, as the case may be, in the absence of
such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note or Coupon:
(i) if Notes other than Restricted Notes are issued;
(ii) presented for payment by or on behalf of a Noteholder or Couponholder which is liable to such taxes, duties, assessments or
governmental charges in respect of that Note or Coupon by reason of it having some connection with the Relevant
Jurisdiction other than the mere holding of that Note or Coupon;
(iii) in respect of any U.S. federal withholding tax that is imposed, assessed, levied or collected by reason of Section 1471
through 1474 of the Code (or any regulations promulgated thereunder or administrative interpretations thereof or agreement
with any Relevant Jurisdiction or the U.S. relating thereto);
(iv) presented for payment more than 30 days after the Relevant Date (as defined in Condition 7(a) above), except to the extent
that the relevant holder would have been entitled to payment of an additional amount or recalculated interest if it had
presented its Note or Coupon for payment on the 30th day after the Relevant Date, on the assumption if such is not the case, that such last day is a Business Day;
(v) where such withholding or deduction is imposed on a payment to an individual or a residual entity and (y) is required to be
made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the
ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or
complying with, or introduced in order to conform to, such Directive or (z) is required to be made pursuant to any
agreements between the European Community and other countries or territories providing for measures equivalent to those
laid down in the European Council Directive 2003/48/EC, including, but not limited to, the agreement between the European
Community and the Confederation of Switzerland dated as of 26 October 2004, or any law or other governmental regulation
implementing or complying with, or introduced in order to conform to, such agreements;
(vi) where such withholding or deduction is imposed on a payment and is required to be made pursuant to laws enacted by
Switzerland providing for the taxation of payments according to principles similar to those laid down in the draft legislation
proposed by the Swiss Federal Council on 24 August 2011, in particular the principle to have a person other than the Issuer
withhold or deduct the tax, including, without limitation, any paying agent;
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(vii) where such withholding or deduction is required to be made pursuant to any agreements between Switzerland and other
countries on final withholding taxes (internationale Quellensteuern) levied by a paying agent in respect of an individual
resident in the other country on interest or capital gain paid, or credited to an account, relating to a Note;
(viii) presented for payment by or on behalf of a holder who would be able to avoid such withholding or deduction by presenting
the relevant Note or Coupon to a Paying Agent in another Member State of the European Union;
(ix) (if so specified in the applicable Final Terms) if the payment could have been made to the relevant Noteholder or
Couponholder without such withholding or deduction if it were a Qualifying Lender (as defined below), but on that date that
Noteholder or Couponholder is not or has ceased to be a Qualifying Lender other than as a result of any change after the date
it became a Noteholder or Couponholder under these Conditions in (or in the interpretation, administration, or application of)
any law or double taxation treaty, or any published practice or concession of any relevant taxing authority; or
(x) if the payment could have been made without such withholding or deduction if the Noteholders had complied with Conditions 10(j) and 10(k) (if Condition 10(j) is expressed in the applicable Final Terms to apply).
As used in the Conditions:
“Guidelines” means, together, the guideline “Interbank Loans” of 22 September 1986 (S-02.123) (Merkblatt “Verrechnungssteuer auf Zinsen von Bankguthaben, deren Gläubiger Banken sind (Interbankguthaben)” vom 22. September 1986); the guideline “Bonds” of April 1999 (S 02.122.1) (Merkblatt “Obligationen” vom April 1999); the guideline “Syndicated
Loans” of January 2000 (S-02.128) (Merkblatt “Steuerliche Behandlung von Konsortialdarlehen, Schuldscheindarlehen, Wechseln und Unterbeteiligungen” vom Januar 2000); the circular letter No. 15 (1-015-DVS-2007) of 7 February 2007 in relation
to bonds and derivative financial instruments as subject matter of Swiss federal income tax, Swiss federal withholding tax and
Swiss federal stamp taxes (Kreisschreiben Nr. 15 “Obligationen und derivative Finanzinstrumente als Gegenstand der direkten Bundessteuer, der Verrechnungssteuer und der Stempelabgaben” vom 7. Februar 2007) and the circular letter “Deposits” of 26 July 2011 (1-034-V-2011) (Kreisschreiben Kundenguthaben vom 26. Juli 2011), each as issued, and as amended from time to
time, by the Swiss federal tax authorities.
“Non-Bank Rules” means the Ten Non-Bank Rule and the Twenty Non-Bank Rule (each as defined below).
“Permitted Non-Qualifying Lender” means in respect of a Series of Restricted Notes a person or entity which is not a
Qualifying Bank on the date it becomes a Noteholder and:
(i) is initially a Permitted Non-Qualifying Lender (if any) specified in the applicable Final Terms (for so long as that Permitted
Non-Qualifying Lender continues to be a Noteholder in accordance with the Conditions), or
(ii) is a successor of an initial Permitted Non-Qualifying Lender, or any subsequent successor thereof, by way of Transfer (as
defined in Condition 10(j)) of all but not some only of the Restricted Notes held by such initial Permitted Non-Qualifying
Lender, or such subsequent successor thereof (for so long as that successor continues to be a Noteholder in accordance with
the Conditions), which:
(a) has prior to its becoming a Noteholder, satisfied all obligations to be fulfilled by a proposed Permitted Non-Qualifying
Lender in accordance with Condition 10(j), provided that:
(A) within ten (10) Business Days of notification to it by the existing Permitted Non-Qualifying Lender of the identity
of such proposed Permitted Non-Qualifying Lender, the Issuer may, as a condition precedent to such proposed
Permitted Non-Qualifying Lender becoming a Noteholder:
(i) request from that proposed Permitted Non-Qualifying Lender a confirmation that it has disclosed to the
Issuer all facts relevant to the determination as to whether it would be a Permitted Non-Qualifying Lender
and would constitute one (1) person only for purposes of the Non-Bank Rules; and
(ii) irrespective of whether a request is made in accordance with paragraph (a)(A)(i) above, request from that
proposed Permitted Non-Qualifying Lender a tax ruling of the Swiss Federal Tax Administration (at the cost
of the existing Permitted Non-Qualifying Lender or the proposed Permitted Non-Qualifying Lender),
confirming to the Issuer’s satisfaction that such proposed Permitted Non-Qualifying Lender does constitute
one (1) person only for purposes of the Non-Bank Rules; and
(B) the Issuer, acting reasonably, shall confirm within ten (10) Business Days of notification of all facts (if a request in accordance with paragraph (a)(A)(i) above has been made) or receipt of a tax ruling (if a request in accordance
with paragraph (a)(A)(ii) above has been made) whether or not such disclosure, or such tax ruling, as the case may
be, is satisfactory and, in the absence of such confirmation, the Issuer shall be deemed to have confirmed such
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disclosure, or such tax ruling, as the case may be, is so satisfactory on the tenth (10th) Business Day after receipt
hereof or thereof; and
(b) has, simultaneously with becoming a Noteholder, succeeded the existing Permitted Non-Qualifying Lender as “Permitted Non-Qualifying Lender” under all, but not some only, Restricted Notes of the respective Series, and under
any and all other existing or future Series of Restricted Notes, as the case may be, or similar instruments, between the
issuer and the existing Permitted Non-Qualifying Lender (or any successor thereof).
“Permitted Non-Qualifying Lenders” means in respect of a Series of Restricted Notes the number of Permitted Non-Qualifying
Lenders specified in the applicable Final Terms.
“Qualifying Bank” means a person or entity which (a) effectively conducts banking activities with its own infrastructure and
staff as its principal business purpose and which has a banking licence in full force and effect issued in accordance with the
banking laws in force in its jurisdiction of incorporation, or if acting through a branch, issued in accordance with the banking laws
in the jurisdiction of such branch and (b) is organised under the laws of a country which is a member of the Organisation for Economic Co-operation and Development (OECD).
“Qualifying Lender” means a Noteholder which is a Qualifying Bank or a Permitted Non-Qualifying Lender.
“Restricted Notes” means Notes issued by ZIC in accordance with Conditions 10(j) and 10(k).
“Ten Non-Bank Rule” means the rule that the aggregate number of Noteholders under a Series of Restricted Notes which are not
Qualifying Banks must not at any time exceed ten, in each case in accordance with the meaning of the Guidelines.
“Twenty Non-Bank Rule” means the rule that the aggregate number of the Issuer’s lenders (including Noteholders), other than
Qualifying Banks, under all outstanding debts relevant for classification as debenture (Kassenobligation), such as intra-Group
loans, facilities and/or private placements (including under Restricted Notes and Notes not classified as a taxable bond (Anleihensobligation)) must not at any time exceed twenty, in each case in accordance with the meaning of the Guidelines.
Under existing law, ZIC is obliged to withhold the Swiss federal withholding tax on any payment of interest in respect of a Note at the current rate of 35 per cent. On 24 August 2011 the Swiss Federal Council issued draft legislation, which, if enacted, would remove such obligation entirely. Instead, the obligation would be imposed on any paying agent in Switzerland (as defined in the proposed new law) but only if the payment of interest in respect of a Note were made to an individual resident in Switzerland or to any person (not only individual) resident outside Switzerland. In all other cases no withholding obligation would arise under the proposed new law. 8. Prescription The Notes and Coupons will become void unless presented for payment within a period of 10 years (in the case of principal) and
five years (in the case of interest) after the Relevant Date (as defined in Condition 7) therefor.
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of
which would be void pursuant to this Condition or Condition 5(b) or any Talon which would be void pursuant to Condition 5(b).
9. Events of Default
(a) Senior Notes
This Condition 9(a) is only applicable to Senior Notes.
The Trustee at its discretion may, and if so requested in writing by the holders of not less than 25 per cent in nominal amount of
the Notes then outstanding or if so directed by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders shall
(subject, in the case of the happening of any of the events set out in Conditions 9(a)(ii), (iii), (v), (vi), (vii), (ix) and (x) (to the
extent that it applies to Conditions 9(a)(v), (vi), (vii) and (x)) below, to the Trustee having certified in writing that the happening
of such event is in its opinion materially prejudicial to the interests of the Noteholders and, in all cases to the Trustee having been
indemnified and/or secured to its satisfaction), give notice (the “default notice”) in writing to the relevant Issuer and ZIC (where
ZIC is not the relevant Issuer) that the Notes are immediately due and repayable if any of the following events (“Events of Default”) shall have occurred and be continuing:
(i) there is a failure by the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) to pay principal or interest on any of the
Notes when due and such failure continues for a period of fourteen days; or
(ii) a default is made by the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) in the performance or observance of
any other covenant, condition or provision contained in the Trust Deed or in the Notes and on its part to be performed or
observed (other than the covenant to pay principal and interest in respect of any of the Notes) and (except where the Trustee
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certifies in writing that, in its opinion, such default is not capable of remedy, when no such notice as mentioned below shall
be required) such default continues for the period of 30 days (or such longer period as the Trustee may permit) next
following the service by the Trustee on the relevant Issuer or ZIC, as the case may be, of notice requiring such default to be
remedied; or
(iii) if any other indebtedness of the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) for borrowed moneys is
declared due and payable prior to the due date for payment thereof by reason of default on the part of the relevant Issuer or
ZIC (where ZIC is not the relevant Issuer), or if any such indebtedness is not repaid on the due date for payment thereof (or
by the expiry of any applicable grace period), or any guarantee or indemnity in respect of indebtedness for borrowed moneys
given by the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) is not honoured when due and called upon or at the
expiry of any applicable grace period, save in any such case where the relevant payment liability is being contested in good
faith and by appropriate means, provided that no such event as aforesaid shall constitute an Event of Default unless the
amount declared due and payable or not paid, either alone or when aggregated with other such amounts then declared due
and payable or not paid by such Issuer or ZIC (where ZIC is not the relevant Issuer), shall amount to at least
USD300,000,000 or its equivalent in other currencies; or
(iv) a resolution is passed or an order of a court of competent jurisdiction is made that the relevant Issuer or ZIC (where ZIC is
not the relevant Issuer) be wound up or dissolved or the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) stops
payment or ceases business, or disposes (other than in the ordinary course of its business) of the whole or substantially the
whole of its assets, otherwise than in any such case for the purposes of or pursuant to and followed by a consolidation,
amalgamation, merger or reconstruction the terms of which shall have previously been approved in writing by the Trustee or
by an Extraordinary Resolution of Noteholders or as a result of a Permitted Reorganisation; or
(v) an encumbrancer or a person with similar functions appointed for execution (in Switzerland, a Sachwalter or
Konkursverwalter) takes possession or a receiver is appointed of the whole or substantially the whole of the assets or
undertaking of the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) or a distress, execution or seizure before
judgment is levied or enforced upon or sued out against any substantial part of the property, assets or revenues of the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) unless discharged, stayed or removed within 60 days thereof (or
such longer period as the Trustee may consider appropriate in relation to the jurisdiction concerned) or being contested in
good faith and by appropriate means; or
(vi) the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) is insolvent or bankrupt or unable to pay its debts as and
when they fall due or the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) shall initiate or consent or become
subject to proceedings relating to itself under any applicable bankruptcy, liquidation, insolvency, composition,
Nachlassvertrag, faillite, administration, examinership, or insolvency law or make a general assignment for the benefit of, or
enter into any composition with, its creditors or notifies the court of its financial situation in accordance with Article 725(2)
of the Swiss Code of Obligations or enters into a moratorium (Stundung); or
(vii) proceedings shall have been initiated against the relevant Issuer or ZIC (where ZIC is not the relevant Issuer), under any
applicable bankruptcy, composition, administration or insolvency law in respect of a sum claimed in aggregate of at least
USD200,000,000 or its equivalent in other currencies unless such proceedings are discharged or stayed within a period of
60 days (or such longer period as the Trustee may consider appropriate in relation to the jurisdiction concerned) or are being
contested in good faith and by appropriate means; or
(viii) if the relevant Issuer is ZF (Luxembourg) or ZF (UK), if the Senior ZIC Guarantee ceases to be, or is claimed by ZIC not to
be, in full force and effect; or
(ix) where ZIC is not the relevant Issuer, the relevant Issuer (excluding ZF (UK)) ceases to be a subsidiary wholly-owned and
controlled, directly or indirectly, by ZIC, unless such cessation is as a result of a Permitted Reorganisation or is previously
approved either in writing by the Trustee or by an Extraordinary Resolution of Noteholders; or
(x) any event occurs which under applicable laws has an analogous effect to any of the events referred to in paragraphs (iv) to
(vii) above.
(b) Subordinated Notes
This Condition 9(b) is only applicable to Dated Subordinated Notes and Undated Subordinated Notes.
(i) Events of Default for Dated Subordinated Notes and Undated Subordinated Notes
The Trustee at its discretion may, and if so requested in writing by the holders of not less than 25 per cent in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders shall
(but, in each case, subject to the Trustee having been indemnified and/or secured to its satisfaction), give notice to the relevant
Issuer and the Guarantor that the Notes are immediately due and repayable if any of the following events shall have occurred and
be continuing:
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(a) subject to the provisions of Condition 4(d), there is a failure by the relevant Issuer to pay principal or interest on any of
the Notes when due and such failure continues for a period of fourteen days; or
(b) a resolution is passed or an order of a court of competent jurisdiction is made that the relevant Issuer or the Guarantor
be wound up or dissolved otherwise than for the purpose of or pursuant to and followed by a consolidation,
amalgamation, merger or reconstruction the terms of which shall have previously been approved in writing by the
Trustee or by an Extraordinary Resolution of Noteholders or as a result of a Permitted Reorganisation.
(ii) Proceedings for Winding-up
If the Notes become due and repayable (whether pursuant to Condition 9(b)(i), Condition 6(c) or 6(d) or 6(e) or otherwise) and are not paid when so due and repayable, the Trustee may at its discretion participate in, but not itself institute, proceedings for the winding-up of the relevant Issuer and may take no further action to enforce the obligations of the relevant Issuer for payment of any principal or interest (including Arrears of Interest, if any) in respect of the Notes. If the Guarantor fails to pay to the Trustee (pursuant to the relevant Subordinated ZIC Guarantee and the Trust Deed) an amount claimed under the relevant Subordinated ZIC Guarantee, the Trustee may at its discretion participate in, but not itself institute, proceedings for the winding-up of the Guarantor and may take no further action to enforce the obligations of the Guarantor under the relevant Subordinated ZIC Guarantee. No payment in respect of the Notes may be made by the relevant Issuer pursuant to Condition 9(b)(i), nor will the Trustee accept the same, otherwise than during or after a winding-up of the relevant Issuer. (iii) Enforcement Without prejudice to Condition 9(b)(i) or (ii) above (including, for the avoidance of doubt, the Trustee’s right to make a demand under the relevant Subordinated ZIC Guarantee), however, in the case of Restricted Notes, subject to Conditions 10(j) and 10(k), the Trustee may at its discretion and without further notice institute such proceedings against the relevant Issuer or, as the case may be, the Guarantor as it may think fit to enforce any obligation, condition or provision binding on the relevant Issuer or, as the case may be, the Guarantor under the Trust Deed, the Notes or the Coupons (other than any obligation for the payment of any principal or interest in respect of the Notes or the Coupons) provided that the relevant Issuer and the Guarantor shall not by virtue of the institution of any such proceedings be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it.
(iv) Rights of Noteholders No Noteholder or Couponholder shall be entitled to proceed directly against the relevant Issuer or, as the case may be, the Guarantor or to prove in the winding-up of the relevant Issuer or, as the case may be, the Guarantor unless the Trustee, having become so bound to proceed or being able to prove in such winding-up, fails to do so within a reasonable period and such failure shall be continuing, in which case the Noteholders or Couponholder shall have only such rights against the relevant Issuer or, as the case may be, the Guarantor as those which the Trustee is entitled to exercise. Any such proceedings brought by any Noteholder or Couponholder shall be brought in the name of the Trustee, subject to such Noteholder or Couponholder indemnifying the Trustee to its satisfaction.
(v) Extent of Noteholders’ remedy
No remedy against the relevant Issuer or the Guarantor other than as referred to in this Condition 9(b), shall be available to the Trustee or the Noteholders or Couponholders, whether for the recovery of amounts owing in respect of the Notes or under the Trust Deed or in respect of any breach by the relevant Issuer of any of its other obligations under or in respect of the Notes or under the Trust Deed. In this Condition: “Permitted Reorganisation” means an amalgamation, merger, consolidation, reorganisation or other similar arrangement entered into by the relevant Issuer or ZIC (where ZIC is not the relevant Issuer) under which: (a) the whole or a substantial part of the business, undertaking and assets of the relevant Issuer or, as the case may be, ZIC are
transferred to and all the liabilities and obligations of the Issuer or, as the case may be, ZIC are assumed by the new or surviving entity either:
(i) automatically by operation of applicable law; or (ii) the new or surviving entity assumes all the obligations of the Issuer or, as the case may be, ZIC, under the terms of the
Trust Deed, and the Notes and (as the case may be) the Senior ZIC Guarantee or the Subordinated ZIC Guarantee, as fully as if (and to the same extent in terms of ranking in a winding-up) it had been named in the Trust Deed and the Notes and (as the case may be) the Senior ZIC Guarantee or the Subordinated ZIC Guarantee, in place of the Issuer or, as the case may be, ZIC; and, in either case,
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(b) the new or surviving entity will immediately after such amalgamation, merger, consolidation, reorganisation or other similar
arrangement be subject to the same regulation and supervision by the same regulatory authority (if any) as the relevant Issuer
or (as the case may be) ZIC was subject immediately prior thereto.
10. Exchange of Notes, transfer of Registered Global Notes, interests in Reg. S Notes, Individual Registered Notes and Replacement of Notes, Coupons and Talons
(a) Exchange of Bearer Notes for Registered Notes
If so specified in the applicable Final Terms, a Bearer Note in definitive form may be exchanged for Registered Notes of like
aggregate nominal amount (in individual registered form) by submission of a duly completed request for exchange substantially in
the form provided in the Agency Agreement (an “Exchange Request”), copies of which are available from the specified office of
the Registrar or any Transfer Agent, together with the Definitive Bearer Note and all unmatured Coupons and Talons appertaining
thereto, to a Transfer Agent at its specified office. Within five business days (being for this purpose, a day on which commercial banks and foreign exchange markets are open for business in the jurisdiction of the relevant Transfer Agent) of the request, in
relation to Individual Registered Notes for which the Definitive Bearer Note is to be exchanged, the relevant Transfer Agent will
authenticate (and in the case of an NGN, effectuate) and deliver, or procure the authentication (and in the case of an NGN,
effectuation) and delivery of, at its specified office to the holder or (at the risk of the holder) send by mail to such address as may
be specified by the holder in the Exchange Request, the Individual Registered Note(s) of a like aggregate nominal amount to the
Definitive Bearer Note(s) exchanged and will enter the exchange of the Definitive Bearer Note(s) in the Register maintained by
the Registrar as of the date which is 40 days after the date on which any Temporary Global Note is issued (the “Exchange Date”).
Exchange Requests may not be presented on or after the Record Date (as defined in Condition 5(b)) in respect of any Interest
Payment Date up to and including such Interest Payment Date. Interest on Individual Registered Notes issued on exchange will
accrue as from the immediately preceding Interest Payment Date, as the case may be. No exchanges of Bearer Notes for
Registered Notes or interests in Registered Global Notes will be permitted for so long as the Bearer Notes are represented by a Temporary Bearer Global Note.
(b) Exchange of interests in Registered Global Notes for Individual Registered Notes
Interests in the Reg. S Global Note will be exchangeable for Individual Registered Notes in the following limited circumstances:
(i) if Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of
holiday, statutory or otherwise) or announces its intention permanently to cease business or does in fact do so and no alternative
clearance system acceptable to the Trustee is available or (ii) the Trustee has instituted or has been directed to institute any
judicial proceeding in a court to enforce the rights of Noteholders under the Notes represented by such Registered Global Note,
and the Trustee has been advised by counsel that in connection with such proceedings it is necessary or appropriate for the Trustee
to obtain possession of Individual Registered Notes representing the Registered Global Note. Upon the occurrence of any of the events described in the preceding sentence, the relevant Issuer will cause the appropriate Individual Registered Notes to be
delivered, provided that notwithstanding the above, no Individual Registered Notes will be issued until expiry of the applicable
Distribution Compliance Period.
(c) Transfers of Registered Global Notes
Transfers of a Registered Global Note shall be limited to transfers of such Registered Global Note, in whole but not in part, to a
nominee of Euroclear or Clearstream, Luxembourg or to a successor of any of them or such successor’s nominee.
(d) Transfers of interests in Reg. S Notes
Prior to expiry of the applicable Distribution Compliance Period, transfers by the holder of, or of an interest in, a Reg. S Note to a transferee in the U.S. will only be made pursuant to the U.S. Securities Act or an exemption therefrom, subject to receipt by the
relevant Issuer of such satisfactory evidence as such Issuer may reasonably require, which may include an opinion of U.S.
counsel, that such transfer is in compliance with any applicable securities laws of any state of the U.S., and in accordance with any
applicable securities laws of any state of the U.S. or any other jurisdiction.
After expiry of the applicable Distribution Compliance Period such certification requirements will no longer apply to such
transfers.
(e) Exchanges and transfers of Registered Notes generally
Registered Notes may not be exchanged for Bearer Notes.
Transfers of interests in Reg. S Global Notes will be effected by Euroclear or Clearstream, Luxembourg, as the case may be, and,
in turn, by participants and, if appropriate, indirect participants in such clearing systems acting on behalf of transferors and
transferees of such interests. An interest in a Reg. S Global Note will be transferable and exchangeable for Individual Registered
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Notes or for an interest in another Reg. S Global Note only in accordance with the rules and operating procedures for the time
being of Euroclear or Clearstream, Luxembourg (the “Applicable Procedures”).
Upon the terms and subject to the conditions set forth in the Agency Agreement, an Individual Registered Note may be transferred in whole or in part (in the authorised Denominations set out in the applicable Final Terms) by the holder or holders surrendering
the Individual Registered Note for registration of the transfer of the Individual Registered Note (or the relevant part of the
Individual Registered Note) at the specified office of the Registrar or any Transfer Agent, with the form of transfer thereon duly
executed by the holder or holders thereof or his or their attorney or attorneys duly authorised in writing and upon the Registrar or,
as the case may be, the relevant Transfer Agent, after due and careful enquiry, being satisfied with the documents of title and the
identity of the person making the request and subject to such reasonable regulations as the relevant Issuer and the Registrar, or as
the case may be, the relevant Transfer Agent may with the prior approval of the Trustee prescribe, including any restrictions
imposed by the relevant Issuer on transfers of Registered Notes in individual form originally sold to a U.S. person. Subject as
provided above, the Registrar or, as the case may be, the relevant Transfer Agent will, within five business days (being for this
purpose a day on which banks are open for business in the city where the specified office of the Registrar or, as the case may be,
the relevant Transfer Agent is located) of the request (or such longer period as may be required to comply with any applicable fiscal or other laws or regulations) authenticate and deliver, or procure the authentication and delivery of, at its specified office to
the transferee or (at the risk of the transferee) send by mail to such address as the transferee may request, a new Individual
Registered Note of a like aggregate nominal amount to the Registered Note (or the relevant part of the Individual Registered Note)
transferred. In the case of the transfer of part only of an Individual Registered Note, a new Individual Registered Note in respect
of the balance of the Registered Note not transferred will be so authenticated and delivered or (at the risk of the transferor) sent to
the transferor.
Exchanges or transfers by a holder of an Individual Registered Note for an interest in, or to a person who takes delivery of such
Individual Registered Note through, a Reg. S Global Note will be made no later than 60 days after the receipt by the Registrar or
as the case may be, relevant Transfer Agent of the Individual Registered Note to be so exchanged or transferred and, if applicable,
upon receipt by the Registrar of a written certification from the transferor.
(f) Registration of transfer upon partial redemption
In the event of a partial redemption of Notes under Condition 6(e), the relevant Issuer shall not be required:
(i) to register the transfer of Registered Notes (or parts of Registered Notes) during the period beginning on the sixty-fifth day
before the date of the partial redemption and ending on the date on which notice is given specifying the serial numbers of
Notes called (in whole or in part) for redemption (both inclusive); or
(ii) to register the transfer of any Registered Note, or part of a Registered Note, called for partial redemption.
(g) Closed Periods
No Noteholder may require the transfer of a Registered Note to be registered during the period of 30 days ending on the due date
for any payment of principal or interest on that Note.
(h) Costs of exchange or registration
The transfer of a Note will be effected without charge by or on behalf of the relevant Issuer, the Registrar or any Transfer Agent
but against such indemnity as the Registrar or (as the case may be) such Transfer Agent may require from the Noteholder in
respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer.
(i) Replacement of Notes, Coupons and Talons Should any Note, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the
Agent, in the case of a Bearer Note or Coupon, or the Registrar, in the case of an Individual Registered Note, or any other place
approved by the Trustee of which notice shall have been published in accordance with Condition 13, upon payment by the
claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity
as the relevant Issuer may reasonably require. Mutilated or defaced Notes, Coupons or Talons must be surrendered before
replacements will be issued.
(j) Restrictions on Transfer of Certain Notes
(i) In the case of Notes issued by ZIC, if the applicable Final Terms designate the Notes as Restricted Notes, (but not otherwise)
the provisions of this Condition 10(j) shall apply and the Restricted Notes will be issued as Registered Notes and may only be assigned, or transferred, including upon an enforcement of a security, (a “Transfer” and “Transferred” shall be
construed accordingly):
(a) in whole or in part, if the Transfer is to a Qualifying Bank, or
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(b) in whole, but not in part (except for parts of Restricted Notes held by Qualifying Banks at the time), if the Transfer is to
a Permitted Non-Qualifying Lender,
provided that no Transfer under this Condition 10(j) may result in more Permitted Non-Qualifying Lenders being
Noteholders than as specified in the applicable Final Terms.
The Restricted Notes will bear a legend setting forth the applicable transfer restrictions provided for in this Condition 10(j).
(ii) A Noteholder may at any time require that the Issuer replaces such Noteholder’s certificate(s) representing the Restricted
Notes with certificates in minimum denominations equal to the Restricted Note Minimum Denomination Amount specified
in the applicable Final Terms.
(iii) Restricted Notes may only be Transferred in amounts equal to the Restricted Note Transfer Amount specified in the
applicable Final Terms.
(iv) Any Transfer of a Restricted Note shall be recorded by the Registrar in the Register on production of:
(a) the relevant certificate representing the Restricted Note and certification delivered to the Registrar by the transferee to
the effect that it is a Qualifying Bank or Permitted Non-Qualifying Lender: and
(b) such other evidence as the Issuer may require.
Any Transfer of a Restricted Note shall only be effective and shall only be recorded by the Registrar in the Register if such
Restricted Note is Transferred in accordance with this Condition 10(j).
(v) Subject to this Condition 10(j), no Noteholder shall at any time enter into any arrangement with another person under which such Noteholder transfers all or part of its interest in the Restricted Notes to that other person, unless under such arrangement
throughout the life of such arrangement:
(a) the relationship between the Noteholder and that other person is that of debtor and creditor (including in the bankruptcy
or similar event of that Noteholder or the Issuer),
(b) the other person will have no proprietary interest in the benefit of the Restricted Notes or in any monies received by the
Noteholder under or in relation to the Restricted Notes held by that Noteholder; and
(c) the other person will under no circumstances (other than by way of permitted Transfer under this Condition 10(j)) be
subrogated to, or substituted in respect of, the Noteholder’s claims under its Restricted Notes and otherwise have any contractual relationship with, or rights against, the Issuer under or in relation to, the Restricted Notes.
For the avoidance of doubt, the granting of security in accordance with Condition 10(k) shall not constitute a transfer of an interest under the Restricted Notes for the purposes of this Condition 10(j).
(vi) As of the Issue Date and for so long as the Restricted Notes are outstanding, the Issuer will ensure that it is in compliance
with the Non-Bank Rules, provided that the Issuer will not be in breach if either of the Non-Bank Rules are exceeded solely by the failure by one or more Noteholders to comply with the limitations set forth in this Condition 10(j) or in Condition 10(k).
(k) Grants of Security If the applicable Final Terms provide that the Notes are Restricted Notes, then the following provisions of this Condition 10(k) shall apply but not otherwise. Any Noteholder may, without the consent of the Issuer, at any time charge or create a security interest in all or any portion of its rights under any Restricted Notes to secure obligations of such Noteholder; provided that: (i) no such charge or creation of a security interest shall:
(a) substitute any such chargee or holder of the benefit of such security interest for such Noteholder as Noteholder except in accordance with the provisions of Condition 10(j); or
(b) require any payments to be made by the Issuer other than as required by the Restricted Notes. A copy of any notice of
charge or creation of security interest as envisaged in this paragraph shall be delivered to the Agent and the Agent shall not be obliged to take any action in regard to such notice; and
(ii) such charge or security interest shall in each case provide that upon any assignment or transfer of the interest in the
Restricted Notes or enforcement of such charge or security interest, any resulting assignment or transfer shall be in accordance with Condition 10(j); and
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(iii) the Noteholder promptly notifies the Registrar of any such charge or security interest and the secured party’s identity and
status by delivering to the Registrar a notification to such effect.
11. Agent, Paying Agents, Transfer Agents and Registrar The names of the initial Agent, the other initial Paying Agents, the initial Registrar and the initial Transfer Agents and their initial specified offices are set out below. The relevant Issuer and ZIC (where ZIC is not the relevant Issuer) are, with the prior written approval of the Trustee (such approval not to be unreasonably withheld), entitled to vary or terminate the appointment of any Paying Agent or Registrar or Transfer Agent and/or appoint additional or other Paying Agents, Registrars, Transfer Agents and/or approve any change in the specified office through which any Paying Agent, Registrar or Transfer Agent acts, provided that: (i) so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent and a Transfer Agent with a
specified office in such place as may be required by the rules and regulations of the relevant stock exchange; (ii) there will at all times be a Paying Agent with a specified office in a city approved by the Trustee in continental Europe; (iii) there will at all times be an Agent and a Registrar; (iv) there will at all times be a Transfer Agent having a specified office in a place approved by the Trustee; and (v) the relevant Issuer and ZIC (where ZIC is not the relevant Issuer) undertake that they will ensure that they maintain a Paying
Agent in an EU member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any law implementing or complying with, or introduced to conform to, such Directive; and
(vi) if legislation is enacted in Switzerland providing for the taxation of payments according to principles similar to those laid
down in the draft legislation proposed by the Swiss Federal Council on 24 August 2011, in particular, the principle to have a person other than the Issuer withhold or deduct tax, the relevant Issuer and ZIC (where ZIC is not the relevant Issuer) will use reasonable efforts to make payments in respect of the Notes through a Paying Agent outside Switzerland, provided that the use of such Paying Agent outside Switzerland would eliminate any Swiss withholding tax that would otherwise apply to payments from the Issuer.
In addition, the relevant Issuer and ZIC (where ZIC is not the relevant Issuer) shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in the penultimate paragraph of Condition 5(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency or where the Paying Agent is not, or ceases to be, a FATCA Compliant Entity, when it shall be of immediate effect) after not less than 30 or more than 45 days’ prior notice thereof shall have been given to the Noteholders in accordance with Condition 13.
Notwithstanding the foregoing, the relevant Issuer will in respect of any Listed Swiss Franc Notes at all times maintain a Principal
Paying Agent having a specified office in Switzerland and will at no time maintain a Paying Agent having a specified office
outside Switzerland, unless permitted by applicable law.
As used herein:
"FATCA Compliant Entity" means a person payments to whom are not subject to FATCA Withholding; and
"FATCA Withholding" means any amount required to be withheld or deducted pursuant to the rules of U.S. Internal Revenue
Code Sections 1471 through 1474 (or any amended or successor provisions and any regulations and official guidance issued
thereunder) pursuant to any inter-governmental agreement, or implementing legislation adopted by another jurisdiction in
connection with these provisions, or pursuant to any agreement with the US Internal Revenue Service.
12. Exchange of Talons
On and after the Interest Payment Date, as appropriate, on which the final Coupon comprised in any Coupon sheet matures, the
Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Agent or any other Paying
Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including)
the final date for the payment of interest due in respect of the Bearer Note to which it appertains) a further Talon, subject to the
provisions of Condition 8. Each Talon shall, for the purposes of these Terms and Conditions, be deemed to mature on the Interest Payment Date (as the case may be) on which the final Coupon of the relative Coupon sheet matures.
13. Notices
All notices regarding the Bearer Notes shall be published (i) in a leading English language daily newspaper of general circulation
in London, (ii) if and for so long as such Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of that
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exchange so require on the website of the Luxembourg Stock Exchange (www.bourse.lu) in Luxembourg, (iii) (in the case of
Listed Swiss Franc Notes) in a leading newspaper of general circulation in Switzerland which is expected to be the Feuille Officielle Suisse du Commerce and in a daily newspaper in each of Zurich and Geneva. It is expected that such publication will be
made (in the case of (i) above) in the Financial Times in London or any other daily newspaper in London approved by the Trustee or, if this is not possible, in another English language daily newspaper approved by the Trustee with general circulation in Europe
and (in the case of (ii) above) the website of the Luxembourg Stock Exchange (www.bourse.lu). The relevant Issuer shall also
ensure that notices are duly published in a manner which complies with the rules and regulations of any other stock exchange,
listing authority and/or quotation system by which the Notes are for the time being admitted to listing, trading and/or quotation.
To the extent required by Luxembourg law, notices shall also be published in the Memorial C, Recueil des Sociétés et Associations (“Memorial C”).
In the case of Bearer Notes and Registered Notes, if and to the extent required by the Luxembourg law of 11 January 2008 relating
to transparency obligations of issuers of securities, as amended, implementing Directive 2004/109/EC of the European Parliament
and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC, as amended, notices will also be published in accordance with the provisions of such law and implementing provisions. Any such notice will be
deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on
the first date on which publication in all the required newspapers has been made. If publication as provided above is not
practicable, notice will be given in such other manner, and will be deemed to have been given on such date, as the Trustee shall
approve. Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the relative
Noteholders in accordance with this Condition.
All notices to holders of Registered Notes will be valid if sent by first-class mail or (if posted to an overseas address) by air-mail
to their registered addresses appearing on the Register. Any such notice shall be deemed to have been given on the fourth day after
the day on which it is mailed. If and for so long as the relevant Registered Notes are listed on the Luxembourg Stock Exchange,
and the rules of that exchange so require, all notices regarding Registered Notes shall be published on the website of the
Luxembourg Stock Exchange (www.bourse.lu).
Until such time as any definitive Notes are issued, there may, so long as the global Note(s) is or are held in its/their entirety on
behalf of Euroclear and Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the
relevant notice to Euroclear and Clearstream, Luxembourg for communication by them to the holders of the Notes and in addition,
for so long as any Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, a notice will be
published on the website of the Luxembourg Stock Exchange (www.bourse.lu). Any such notice shall be deemed to have been
given to the holders of the Notes on the seventh day after the day on which the said notice was given to Euroclear and
Clearstream, Luxembourg.
Notices to be given by any holder of the Notes shall be in writing and given by lodging the same, together with the relative Note
or Notes, with the Agent. Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder of a Note to the Agent and/or the Registrar via Euroclear and/or Clearstream, Luxembourg, as the case may be, in such manner as the
Agent and/or the Registrar and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.
14. Meetings of Noteholders, Modification and Waiver, Entitlement of Trustee, Substitution, Change and Indemnification of Trustee
(a) Single Noteholder
In relation to any Restricted Notes so long as there is only one Noteholder thereof, who shall certify to the Trustee that it is the
sole Noteholder of the Notes and is not holding such Notes as a depositary for, or nominee of, Euroclear, Clearstream,
Luxembourg on or prior to any such amendment, waiver or variation being made (i) no amendment, waiver or variation of the
Notes or the Trust Deed may be made without the prior written consent of such Noteholder and parties to the Trust Deed and (ii) the meeting, quorum and voting provisions of Conditions 14(b) shall not apply.
(b) Meetings of Noteholders
The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests,
including the sanctioning by Extraordinary Resolution of a modification of such Notes, the relative Coupons or any relevant
provisions of the Trust Deed. Such a meeting may be convened by the relevant Issuer, ZIC (where ZIC is not the relevant Issuer),
the Trustee or at the request of Noteholders holding not less than 10 per cent in nominal amount of the Notes for the time being
outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or
representing not less than 50 per cent in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting
one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Trust Deed, the Notes or Coupons
(including modifying the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the
amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes or
Coupons), the quorum shall be one or more persons holding or representing not less than two-thirds in nominal amount of the
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Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing not less than
one-third, in nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of
the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting, and on relevant
Couponholders. The Trust Deed provides that a written resolution signed by or on behalf of the holders of not less than 75 per cent in nominal amount of Notes outstanding shall be as valid and effective as a duly passed Extraordinary Resolution. The provisions
for convening meetings of Noteholders contained in the Trust Deed shall not apply to Listed Swiss Franc Notes.
The provisions of Articles 1157-1186 of the Swiss Code of Obligations will apply to all meetings of holders of Notes issued by
ZIC.
The Trust Deed provides that the Trustee may agree, without the consent of the Noteholders or Couponholders, to any
modification (subject to certain exceptions as provided in the Trust Deed) of, or to any waiver or authorisation of any breach or
proposed breach of, any of these Terms and Conditions or any of the provisions of the Trust Deed, or may (in relation to the
Events of Default set out in Condition 9(a)(ii), (iii), (v), (vi), (vii) and (x) (to the extent it applies to Conditions 9(a)(v), (vi) and
(vii)) determine that any condition, event or act which, but for such determination, would constitute an Event of Default or Potential Event of Default (as defined in the Trust Deed), shall not be treated as such which in any such case, in the opinion of the
Trustee, is not materially prejudicial to the interests of the Noteholders or to any modification of any of these Terms and
Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes, the Coupons or any of the provisions
of the Trust Deed which is of a formal, minor or technical nature or which is made to correct a manifest error or to comply with
mandatory provisions of law. Any such modification, waiver, authorisation or determination shall be binding on the Noteholders
and Couponholders and, unless the Trustee agrees otherwise, any such modification shall be notified to the Noteholders as soon as
practicable thereafter in accordance with Condition 13.
In connection with the exercise by it of any of its trusts, powers, authorities or discretions (including, but without limitation, any
modification, waiver, authorisation or substitution), the Trustee shall have regard to the interests of the Noteholders as a class and,
in particular, but without limitation, shall not have regard to the consequences of such exercise for individual Noteholders or
Couponholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder
be entitled to claim, from the relevant Issuer, ZIC (where ZIC is not the relevant Issuer), or any other person any indemnification
or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except, in the
case of the relevant Issuer, ZIC (where ZIC is not the relevant Issuer), to the extent provided for in Condition 7 and/or any
undertaking given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed.
The Trust Deed contains provisions permitting the Trustee to agree, without the consent of the Noteholders or the Couponholders,
to the substitution at any time or times of any other company in the place of the relevant Issuer as the principal debtor under the
Trust Deed and the Notes and Coupons issued by the relevant Issuer. Notwithstanding the above, by subscribing to or purchasing
the Notes, the Noteholders expressly consent to the substitution of the relevant Issuer and expressly consent to the release of the
Issuer from any and all obligations in respect of the Notes and are deemed to have expressly accepted such substitution. Such agreement shall be subject to the relevant provisions of the Trust Deed, including, except in the case of a substituted issuer
domiciled in Luxembourg where appropriate, an irrevocable and unconditional guarantee by ZIC in terms substantially similar to
those referred to in Condition 3(a) in respect of any Notes issued by the substituted issuer.
The Trust Deed contains general provisions for the retirement and removal of the Trustee and the appointment by the relevant
Issuer of a substitute issuer which has previously been approved by the Trustee.
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including
provisions relieving it from taking action unless indemnified and/or secured to its satisfaction.
For the avoidance of doubt, the provisions of articles 86 to 94-8 of the Luxembourg Act dated 10 August 1915 on commercial
companies, as amended, are excluded in the case of Notes issued by ZF (Luxembourg).
15. Enforcement
(a) Subject to the provisions of Condition 9(b) in the case of Subordinated Notes, the Trustee may at any time, at its discretion
and without notice, however, in the case of Restricted Notes, subject to Conditions 10(j) and 10(k), take such proceedings
against the relevant Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes and the Coupons, but it
shall not be bound to take any proceedings or any other action in relation to the Trust Deed, the Notes or the Coupons unless
(i) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the holders
of not less than 25 per cent in principal amount of the Notes then outstanding, and (ii) it shall have been indemnified and/or
secured to its satisfaction.
(b) No Noteholder or Couponholder shall be entitled to proceed directly against the relevant Issuer unless the Trustee, having
become bound so to proceed, fails so to do within a reasonable period and such failure shall be continuing, in which case the
Noteholder or Couponholder shall have only such rights against the relevant Issuer or, as the case may be, the Guarantor as
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those which the Trustee is entitled to exercise. Any such proceedings brought by any Noteholder or Couponholder shall be
brought in the name of the Trustee, subject to such Noteholder or Couponholder indemnifying the Trustee to its satisfaction.
16. Further Issues
The relevant Issuer shall be at liberty from time to time without the consent of the Noteholders or Couponholders to create and
issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of
the first payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding
Notes.
17. Governing Law and Submission to Jurisdiction
(a) The Trust Deed (other than the provisions relating therein to the Senior ZIC Guarantee and the Subordinated ZIC Guarantee
which shall be governed by, and construed in accordance with the laws of Switzerland), the Notes, (other than the provisions
relating to Subordinated Notes of Condition 2 which shall be governed by, and construed in accordance with, the laws of the jurisdiction of incorporation of the relevant Issuer of the Subordinated Notes) and the Coupons and any non-contractual
obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, English
law.
(b) The relevant Issuer has agreed in the Trust Deed, for the exclusive benefit of the Trustee, the Noteholders and the
Couponholders, that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in
connection with the Notes and/or the Coupons and that accordingly any suit, action or proceedings (together referred to as
“Proceedings”) arising out of or in connection with the Notes and the Coupons may be brought in such courts.
(c) The relevant Issuer has irrevocably waived in the Trust Deed any objection which it may have now or hereafter to the laying
of the venue of any such Proceedings in any such court and any claim that any such Proceedings have been brought in an
inconvenient forum.
(d) Nothing contained in this Condition shall limit any right to take Proceedings against the relevant Issuer in any other court of
competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in
any other jurisdiction, whether concurrently or not.
(e) The relevant Issuer (other than ZF (UK)) has appointed Zurich Insurance plc, UK branch at its registered office for the time
being as its agent for service of process in respect of any Proceedings in England and has undertaken in the Trust Deed that,
in the event of Zurich Insurance plc, UK branch ceasing so to act or ceasing to be registered in England, it will appoint
another person as its agent for service of process in England in respect of any Proceedings in England.
(f) Nothing herein shall affect the right to serve proceedings in any other manner permitted by law.
(g) In respect of Listed Swiss Franc Notes only, the relevant Issuer and the Trustee have agreed in the Trust Deed for the benefit
of the Noteholders and the Couponholders to the additional jurisdiction of the courts of the City of Zurich, venue Zurich 1,
with the right of appeal, where the law permits, to the Swiss Federal Court of Justice in Lausanne, the decision of which
shall be final.
(h) Each of the Senior ZIC Guarantee and the Subordinated ZIC Guarantee are governed by, and shall be construed in
accordance with, the laws of Switzerland. Any legal action or proceedings in respect of each Senior ZIC Guarantee or each
Subordinated ZIC Guarantee shall be brought exclusively in the courts of the City of Zurich, venue Zurich 1, with the right
of appeal, where the law permits, to the Swiss Federal Court of Justice in Lausanne, the decision of which shall be final.
18. Contracts (Rights of Third Parties) Act 1999
No person shall have any right to enforce any term or condition of this Note or the Trust Deed under the United Kingdom
Contracts (Rights of Third Parties) Act 1999.
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TERMS AND CONDITIONS OF THE CAPITAL NOTES
The following, save for the paragraphs in italics, are the Terms and Conditions of the Capital Notes which will be endorsed on each Global Note and each Definitive Bearer Note or Individual Registered Note, in the latter case only if permitted by the relevant stock exchange (if any) and agreed by ZIC and the relevant Dealer at the time of issue but, if not so permitted by the relevant stock exchange (if any) and agreed by ZIC and the relevant Dealer at the time of issue but, if so permitted and agreed, such Definitive Bearer Note or Individual Registered Note will have endorsed thereon or attached thereto such Terms and Conditions. The applicable Final Terms (or the relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and each Definitive Bearer Note or Individual Registered Note. Reference should be made to “Form of the Notes and the
Capital Notes” above for a description of the content of Final Terms which will include the definitions of certain terms used in the following Terms and Conditions or specify which of such terms are to apply in relation in the relevant Capital Notes.
This Capital Note is one of a Series (as defined below) of Capital Notes issued by Zurich Insurance Company Ltd (“ZIC” or the
“Issuer”), constituted by an amended and restated trust deed (as further modified and/or supplemented and/or restated from time
to time, the “Trust Deed”) dated 19 May 2014 made between, inter alios, the Issuer, Zurich Insurance Group Ltd (“ZIG”) and Citicorp Trustee Company Limited (the “Trustee”, which expression shall include any successor as trustee). ZIG is a party to the
Trust Deed for the purposes of giving certain undertakings expressed to be given by it in these Terms and Conditions.
References herein to the “Capital Notes” shall be references to the Capital Notes of this Series and shall mean:
(i) in relation to any Capital Notes represented by a Global Note (which expression shall include any Temporary Global Note or
Permanent Global Note or Permanent Global SIS Note or Reg. S Global Note, all as defined in the Trust Deed), units of the
lowest Specified Denomination in the Specified Currency; and
(ii) in relation to any Capital Notes in definitive bearer form (“Definitive Bearer Notes”) issued in exchange for an interest or
interests in a Global Note in bearer form (“Bearer Global Note”), units of the lowest Specified Denomination in the
Specified Currency; and
(iii) in relation to Individual Registered Notes either issued as such or issued in exchange for a Reg. S Global Note, units of the
lowest Specified Denomination in the Specified Currency.
The Final Terms for this Capital Note (or the relevant provisions thereof) are attached to or endorsed on this Capital Note and
supplement these Terms and Conditions. References to the “applicable Final Terms” are to the Final Terms (or the relevant
provisions thereof) attached to or endorsed on this Capital Note.
The Capital Notes and the Coupons (as defined below) are the subject of an amended and restated agency agreement (the
“Agency Agreement” which expression shall, where the context permits, include any supplements or amendments thereto and
any agency agreement relating to Listed Swiss Franc Capital Notes as referred to in Condition 5(e)) dated 19 May 2014 and made between, inter alios, the Issuer, Citibank, N.A. as issuing and principal paying agent and agent bank (the “Agent”, which
expression shall include any successor agent specified in the applicable Final Terms), the other paying agents named therein
(together with the Agent, the “Paying Agents”, which expression shall include any additional or successor paying agents),
Banque Internationale à Luxembourg as listing agent (the “Luxembourg Listing Agent”), the registrars named therein (each, a
“Registrar”, which expression shall include any additional or successor registrar), the transfer agents named therein (the
“Transfer Agents”, which expression shall include any additional or successor transfer agents) and the Trustee.
Definitive Bearer Notes (unless otherwise indicated in the applicable Final Terms) have interest coupons (“Coupons”) and, if
indicated in the applicable Final Terms, talons for further Coupons (“Talons”) attached on issue. Any reference herein to
Coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons. Registered Notes do not have
Coupons attached on issue.
The Trustee acts for the benefit of the holders for the time being of the Capital Notes (the “Noteholders”) in accordance with the provisions of the Trust Deed. As used herein, “Tranche” means Capital Notes which are identical in all respects (including as to listing) and “Series” means a Tranche of Capital Notes together with any further Tranche or Tranches of Capital Notes which are (i) expressed to be consolidated and form a single series and (ii) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices. Copies of the Trust Deed, the Agency Agreement and the applicable Final Terms are available for inspection during normal business hours at the principal London office for the time being of the Trustee (being at the date of the Trust Deed at Citicorp Trustee Company Limited, 14th Floor, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United Kingdom) and are available at the specified office of each of the Agent, the other Paying Agents, the Registrar and the Transfer Agents save that, if this Capital Note is an unlisted Capital Note of any Series, the applicable Final Terms will only be available for inspection at the principal London office of the Agent by a Noteholder holding one or more unlisted Capital Notes of that Series and such Noteholder must produce evidence satisfactory to the Agent as to its holding of Capital Notes and as to identity. The Noteholders
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and the holders of the Coupons (the “Couponholders”) are deemed to have notice of, are bound by, and are entitled to the benefit of, all the provisions of the Trust Deed and the applicable Final Terms, and are deemed to have notice of, and be bound by, the provisions of the Agency Agreement which are applicable to them. Words and expressions defined in the Trust Deed, the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and the Trust Deed, the Trust Deed will prevail and, in the event of any inconsistency between the Trust Deed or the Agency Agreement and the applicable Final Terms, the applicable Final Terms will prevail.
1. Form, Denomination and Title The Capital Notes are either in bearer form (“Bearer Notes”) or in registered form (“Registered Notes”) as specified in the applicable Final Terms and, in the case of Definitive Bearer Notes or Individual Registered Notes, serially numbered, in the Specified Currency and the Specified Denomination(s) specified in the applicable Final Terms. Bearer Notes of one Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination. This Capital Note is a Fixed Rate Capital Note, a Floating Rate Capital Note each as defined in the applicable Final Terms, or a combination of any of the foregoing, depending upon the Interest and Redemption/Payment Basis shown in the applicable Final Terms. This Capital Note is a Listed Swiss Franc Capital Note if it is denominated or payable in Swiss francs and listed on the SIX Swiss Exchange and the applicable Final Terms so state. Each Listed Swiss Franc Capital Note will be represented exclusively by a Permanent Global SIS Note which will be deposited with SIX SIS AG, Olten, Switzerland (“SIS”), or such other intermediary in Switzerland recognised for such purposes by the SIX Swiss Exchange (with respect to any such Permanent Global SIS Note, SIS or such other intermediary, the “Intermediary”) on or prior to the original issue date of such Capital Note. As a matter of Swiss law, once the Permanent Global SIS Note has been deposited with the Intermediary and entered into the accounts of one or more participants of the Intermediary, the Listed Swiss Franc Capital Notes represented thereby will constitute intermediated securities (Bucheffekten) within the meaning of the Swiss Federal Intermediated Securities Act (Bucheffektengesetz) (the “Intermediated Securities”). The Permanent Global SIS Note will be exchangeable for definitive Capital Notes in whole but not in part only if the Swiss paying agent should, after consultation with the Issuer, deem the printing of definitive Capital Notes to be necessary or useful, or if the presentation of definitive Capital Notes is required by Swiss or other applicable laws and regulations in connection with the enforcement of rights of Noteholders, or if the Swiss paying agent at any time at its discretion determines to have definitive Capital Notes issued; holders of Listed Swiss Franc Capital Notes will not have the right to effect or demand the exchange of the Permanent Global SIS Note representing such Listed Swiss Franc Capital Notes into, or delivery of, Notes in definitive or uncertificated form. If definitive Capital Notes are delivered, the relevant Permanent Global SIS Note will be immediately cancelled by the Swiss paying agent and the definitive Notes shall be delivered to the relevant holders against cancellation of the relevant Listed Swiss Franc Capital Notes in such holders' securities accounts. As a matter of Swiss law, a holder of an interest in the Permanent Global SIS Note retains a quotal co-ownership interest (Miteigentumsanteil) in the Permanent Global SIS Note to the extent of the Capital Notes represented by such Permanent Global SIS Note in which such holder has an interest; provided, however, that, for so long as the Permanent Global SIS Note remains deposited with the Intermediary (i.e., for so long as the Capital Notes represented thereby constitute Intermediated Securities), the co-ownership interest is suspended and the Capital Notes represented thereby may only be transferred by the entry of the transferred Capital Notes in a securities account of the transferee. For so long as Capital Notes constitute Intermediated Securities, as a matter of Swiss law, (i) the records of the Intermediary will determine the number of Capital Notes held through each participant of the Intermediary and (ii) the holders of such Capital Notes will be the persons holding such Capital Notes in a securities account (Effektenkonto) that is in their name or, in the case of intermediaries (Verwahrungsstellen), the intermediaries (Verwahrungsstellen) holding such Notes for their own account in a securities account (Effektenkonto) that is in their name. Each Tranche of Bearer Notes may be initially represented by a temporary Global Note without Coupons or Talons (a “Temporary Global Note”) or, if so specified in the applicable Final Terms, a permanent Global Note (a “Permanent Global Note”), which will be delivered to the common depositary for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme, Luxembourg (“Clearstream, Luxembourg”). On or after the end of the period that ends 40 days after completion of the distribution of each Tranche of Capital Notes, as certified by the relevant Dealer, in the case of a non syndicated issue, or the Lead Manager, in the case of a syndicated issue (the “Distribution Compliance Period”), the Temporary Global Note will be exchangeable upon a request as described therein either for interests in a Permanent Global Note without Coupons or Talons or for Definitive Bearer Notes (as indicated in the applicable Final Terms and subject, in the case of Definitive Bearer Notes, to such notice period as is specified in the applicable Final Terms), in each case against certification to the effect that the beneficial owner of interests in such Temporary Global Note is not a U.S. person or a person who has purchased for resale to any U.S. person, as required by U.S. Treasury regulations. Each Tranche of Bearer Notes may also be initially represented by a Permanent Global SIS Note (as defined in the Trust Deed). Unless otherwise specified in the applicable Final Terms, a Permanent Global Note will be exchangeable (free of charge), in whole but not in part, for Definitive Bearer Notes with, where applicable, Coupons and Talons attached (i) if a Dissolution Event (as defined in Condition 9) occurs in respect of any Capital Note, (ii) if Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (weekends and public holidays excepted) or announces an intention to cease business permanently or in fact does so and no alternative clearing system satisfactory to the Trustee is available or (iii), if so specified in the applicable Final Terms, at the option of the Noteholder, provided that, in the case of an issue of Capital Notes with a minimum denomination of EUR 100,000 (or the equivalent thereof in
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the currency in which such issue of Notes is denominated as determined on the date of issue of such Notes) and smaller integral multiples thereof only exchange events (i) or (ii) above will apply.
With respect to a particular Series of Registered Notes, the Registered Notes of each Tranche sold outside the U.S. in reliance on Regulation S under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), will, unless otherwise specified in the applicable Final Terms, be represented by a permanent global Note in registered form, without Coupons or Talons, (the “Reg. S Global Note”) which will be registered in the name of Citivic Nominees Limited as nominee for, and will be deposited with Citibank, N.A. as common depositary for, and in respect of interests held through, Euroclear and Clearstream, Luxembourg. Capital Notes in individual registered form (“Individual Registered Notes”) issued in exchange for Reg. S Global Notes or otherwise sold or transferred in reliance on Regulation S under the U.S. Securities Act, together with the Reg. S Global Notes, are referred to herein as “Reg. S Notes”. Prior to expiry of the Distribution Compliance Period interests in a Reg. S Global Note may be held only through Euroclear or Clearstream, Luxembourg. Individual Registered Notes from the date of issue may, if specified in the applicable Final Terms, be issued in reliance on Regulation S under the U.S. Securities Act. Subject as set out below, title to the Bearer Notes and Coupons will pass by delivery and title to the Registered Notes will pass upon the registration of transfers in accordance with the Agency Agreement and the Trust Deed. The Issuer, the Trustee, the Agent, any Paying Agent, the Registrar, and any Transfer Agent may (subject to applicable laws or as otherwise ordered by a court of competent jurisdiction or an official authority) deem and treat the bearer of any Bearer Note or Coupon and the registered holder of any Registered Note as the absolute owner thereof for all purposes (whether or not it is overdue and notwithstanding any notice of ownership, trust or any interest in it, any writing on it or on the related Individual Registered Note or notice of any previous loss or theft of it) and no person will be liable for so treating the holder. No person shall have any right to enforce any term or condition of this Capital Note or the Trust Deed under the United Kingdom Contracts (Rights of Third Parties) Act 1999. Capital Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg. References in these Terms and Conditions to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system (including SIS) approved by the Issuer, the Trustee and the Agent and specified in the applicable Final Terms.
2. Status of the Capital Notes The Capital Notes and the relative Coupons constitute direct, subordinated and unsecured obligations of the Issuer and rank pari passu, without any preference, among themselves. The claims of the holders of Capital Notes and relative Coupons rank on a voluntary or involuntary insolvency, winding-up, liquidation, dissolution or other similar proceedings of or against the Issuer: (i) after the claims of any Senior Creditors (as defined below); (ii) pari passu with any subordinated obligations of the Issuer which whether now or in the future rank or are expressed to rank
pari passu with the claims of the Noteholders (“Parity Obligations”, and “Parity Obligation” shall be construed accordingly); and
(iii) prior to the claims of the holders of all classes of issued shares in the share capital of the Issuer. For the avoidance of doubt, the Issuer’s obligations under the subordinated support agreements entered into in connection with the enhanced capital advantaged preferred securities (ECAPS) issued by ZFS Finance (USA) Trust II and the Trust Preferred Securities issued by ZFS Finance (USA) Trust V and the Issuer’s obligations under the €143m 12 per cent Capital Notes and U.S.$500m 8.250 per cent Undated Reset Capital Notes each constitute Parity Obligations. In the event of a voluntary or involuntary insolvency, winding-up, liquidation, dissolution or other similar proceedings of or against the Issuer, there shall be payable in such voluntary or involuntary insolvency, winding-up, liquidation, dissolution or other similar proceedings on each Capital Note, subject to the subordination provisions set out in this Condition 2, an amount equal to the principal amount of such Capital Note together with unpaid Deferred Interest (as defined in Condition 3(c)) (if applicable) and interest which has accrued up to, but excluding, the date of repayment.
Notwithstanding the preceding paragraph, if the applicable Final Terms specify that Solvency Deferred Interest Limitation is applicable, then the amount payable in respect of Deferred Interest in the circumstances described in such paragraph shall be
reduced by an amount equal to the Relevant Excess Solvency Deferred Interest.
As used herein “Senior Creditors” means (i) Senior Creditors and holders of Subordinated Notes (each as defined in Schedule 1
Part A to the Trust Deed) and (ii) creditors of the Issuer in respect of a ZIC Subordinated Guarantee (as defined in the Trust Deed)
or in respect of other actual or contingent obligations (including claims of holders of insurance policies issued by the Issuer),
whether outstanding at the Issue Date or subsequently incurred, other than any obligation as to which, in the instrument creating or
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evidencing the obligation or pursuant to which the obligation is outstanding, it is expressly provided that such obligation is pari passu with, or junior to, the Capital Notes and/or any Parity Obligations.
Subject to applicable law, neither the Trustee nor any Noteholder may exercise or claim any right of set-off in respect of any amount owed to it by the Issuer arising under or in connection with the Capital Notes against any claim that the Issuer may have
against the Noteholder and each such Noteholder shall, by virtue of being the Noteholder of any of the Capital Notes, be deemed
to have waived all such rights of set-off.
No security of whatever kind is, or will at any time be, provided by the Issuer or any other person securing the rights of the
Noteholders under the Capital Notes. No agreement may defeat the subordination pursuant to the provisions set out in this
Condition 2 or shorten any applicable notice period in respect of the Capital Notes as provided in these Conditions. If the Capital
Notes are redeemed in breach of Condition 6(a) (if applicable), (b), (c) or (d), the amounts so paid to any Noteholder must be
repaid to the Issuer by such Noteholder irrespective of any agreement to the contrary, unless (x) the Issuer has been dissolved or
(y) such amounts have been replaced by regulatory capital qualifying for the same regulatory (sub-) category or equivalent thereof
or (z) if FINMA or any Successor Authority (each as defined below) applicable at the time has given its prior written consent (if necessary) to the redemption.
The subordination provisions of this Condition 2 which are governed by, and shall be construed in accordance with, the laws of
Switzerland, are irrevocable.
As used herein:
“FINMA” means the Swiss Financial Market Supervisory Authority FINMA in Switzerland.
“Relevant Excess Solvency Deferred Interest” means the amount by which any Relevant Solvency Deferred Interest which has
not been settled through the application of the APM Settlement exceeds 25 per cent of the Aggregate Nominal Amount of the
Capital Notes (then outstanding).
“Relevant Solvency Deferred Interest” means Solvency Deferred Interest arising only by reason of limb (iii) of the definition of
Solvency Event.
“Successor Authority” means any domestic or foreign successor to FINMA or otherwise that has primary supervisory authority
over the Issuer and/or the Zurich Insurance Group.
3. Deferral or Cancellation of Interest
(a) Solvency Event Condition 3(a) shall only apply in respect of a Capital Note where the applicable Final Terms specify that Solvency Event is
applicable.
If Solvency Event is specified in the applicable Final Terms as being applicable and a Solvency Event has occurred and is
continuing as at the relevant Determination Date, then, in relation to any Interest Payment which is otherwise scheduled to be paid
on an Interest Payment Date the Issuer shall (if the applicable Final Terms specify the Capital Note as being Cumulative in
relation to a Solvency Event) defer, or (if the applicable Final Terms specify the Capital Note as being Non-Cumulative in relation
to a Solvency Event) cancel such Interest Payment, and shall defer or, as applicable, cancel the relevant Solvency Shortfall if,
were the Issuer to make payment of the relevant Interest Payment, a Solvency Event would as at the date of such payment occur,
in any such case except that the Issuer will not be required to defer or, as applicable, cancel such Interest Payment or Solvency
Shortfall, as the case may be, if FINMA or any Successor Authority applicable at the time has given its consent to such payment.
Noteholders shall have no entitlement to, or claim for, any Interest Payment or Solvency Shortfall cancelled pursuant to this
Condition 3(a) and, for the avoidance of doubt, such amount shall not constitute Deferred Interest (as defined below) hereunder
and such cancellation shall not constitute a Dissolution Event by the Issuer or any other breach or default under the Capital Notes
or for any other purpose.
Any Interest Payment or Solvency Shortfall deferred pursuant to this Condition 3(a) is referred to herein as “Solvency Deferred Interest”.
The Issuer shall give notice of any such deferral or cancellation to the Trustee (together with the certificate of the occurrence of a
Solvency Event and as to the quantum of any Solvency Shortfall referred to below), the Agent and to the Noteholders in
accordance with Condition 13 not less than seven days prior to the relevant Interest Payment Date.
A certificate as to the occurrence of a Solvency Event, as to the quantum of any Solvency Shortfall, signed by two Authorised
Officers of the Issuer or ZIG, shall, in the absence of manifest error be treated and accepted by the Issuer, the Noteholders, the
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Trustee, the Couponholders and all other interested parties as correct and sufficient evidence thereof. The Trustee shall be entitled
to rely upon such certification absolutely without liability to any person.
As used herein:
“Applicable Regulations” means, with respect to the Relevant Entity at any time, the regulatory capital requirements applicable
to such entity and/or its group at such time including, but not limited to, Swiss insurance regulatory law (for group solvency or
single solvency and/or financial conglomerate purposes, as applicable) and/or applicable generally recognised administrative
practice, if any, of FINMA or any Successor Authority.
“Assets” means, where ZIC is specified in the relevant Final Terms as being the Relevant Entity, the Issuer’s consolidated total
assets and, where ZIG is specified in the relevant Final Terms as being the Relevant Entity, ZIG’s consolidated total assets, each
as shown in its latest annual audited balance sheet, but adjusted for all subsequent events, as reasonably determined by the
Relevant Entity, or if the Relevant Entity is being liquidated, its liquidator.
“Determination Date” means, in respect of an Interest Payment Date, the 20th business day in Zurich preceding such date.
“Interest Payment” means, with respect to an Interest Payment Date, the interest scheduled to be paid on such Interest Payment
Date.
“Liabilities” means, where ZIC is specified in the applicable Final Terms as being the Relevant Entity, ZIC’s consolidated total
liabilities and, where ZIG is specified in the applicable Final Terms as being the Relevant Entity, ZIG’s consolidated total
liabilities, each as shown in its latest annual audited balance sheet, but adjusted for all subsequent events, as reasonably
determined by the Relevant Entity, or if the Relevant Entity is being liquidated, its liquidator.
“Relevant Entity” means ZIC and/or ZIG, as specified in the applicable Final Terms.
A “Restricted Payments Provision” in any obligation is a provision in such obligation or any related transaction agreements
providing for complete or partial prohibitions as to payment of distributions (or similar payments) on other securities that rank
pari passu with, or junior to, such obligations for so long as distributions (or similar payments) on such obligations remain unpaid.
A “Solvency Event” shall be deemed to have occurred as at any date if as at such date:
(i) the Relevant Entity does not at such date have appropriate funds to cover the required minimum solvency margin or meet
any other required level of own funds regulatory capital (or a comparable term in case of a change in Applicable
Regulations) in accordance with Applicable Regulations and a deferral or, as applicable, cancellation of interest is required
under the Applicable Regulations; or
(ii) the Relevant Entity is unable to pay its debts owed to its Senior Creditors (as defined in Condition 2(a) or 2(b), as the case
may be, if ZIC is specified as Relevant Entity in the applicable Final Terms, and as defined below if ZIG is specified as
Relevant Entity in the applicable Final Terms) as they fall due; or
(iii) the Relevant Entity’s Assets do not exceed its Liabilities (each as defined above) (other than liabilities to persons who are
not Senior Creditors); or
(iv) FINMA or a Successor Authority has given (and not withdrawn) notice to the Relevant Entity that it has determined, in view
of the financial and/or capital position of the Relevant Entity, that in accordance with Applicable Regulations at such time,
the Issuer must take specified action in relation to payments on the Capital Notes; or
(v) the Relevant Entity’s auditors cannot give a confirmation pursuant to Article 725(2) of the Swiss Code of Obligations or any equivalent provision under applicable laws.
If ZIG is specified as the Relevant Entity in the Final Terms, “Senior Creditors” means (i) all unsubordinated creditors of ZIG;
and (ii) all creditors of ZIG whose claims are subordinated by operation of law or pursuant to their terms, to the claims of other
unsubordinated creditors of that entity but not further or otherwise.
“Solvency Shortfall” means the portion of interest that would cause a Solvency Event to occur or be continuing.
If Solvency Event is specified in the applicable Final Terms as being not applicable, then solely in respect of Interest Payments
and without prejudice to Condition 2, such Capital Notes rank senior to any existing or future obligations of the Issuer (“other obligations”) that would otherwise have ranked pari passu with the Capital Notes, if and to the extent payment of such Interest Payments would otherwise be prohibited by any Restricted Payments Provision in such other obligations as a result of solvency
event provisions with respect to such other obligations.
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If payment of an Interest Payment is deferred or, as applicable, cancelled pursuant to Condition 3(a), the Issuer shall not have any
obligation to pay such Interest Payment on the relevant Interest Payment Date and the failure to pay such Interest Payment shall
not constitute a Dissolution Event by the Issuer or any other breach or default under the Capital Notes or for any other purpose.
(b) Mandatory Cancellation
Condition 3(b) shall only apply in respect of a Capital Note where the applicable Final Terms specify that Trigger Event is
applicable.
If Trigger Event is specified in the applicable Final Terms as being applicable and a Trigger Event has occurred and is continuing
as at the relevant Determination Date, then, in relation to any Interest Payment which is otherwise scheduled to be paid on an
Interest Payment Date, the Issuer shall cancel the amount (the “Trigger Event Shortfall”) by which such Interest Payment
exceeds the New Capital Amount per Capital Note outstanding at such time. The Issuer shall give notice of such cancellation and
of the relevant Trigger Event Shortfall to the Trustee (together with the certificate referred to below), the Agent and to the
Noteholders in accordance with Condition 13 not less than seven days prior to the relevant Interest Payment Date.
Noteholders shall have no entitlement to, or claim for, any Trigger Event Shortfall cancelled pursuant to this Condition 3(b) and,
for the avoidance of doubt, such cancellation shall not constitute a Dissolution Event by the Issuer or any other breach or default
under the Capital Notes or for any other purpose.
As used herein:
A “Trigger Event” shall be deemed to have occurred at any Determination Date if each of the following has occurred:
(i) ZIG’s Trailing Four Quarters Consolidated Net Income Amount is not a positive amount for the four fiscal quarter periods
ending on the last day of ZIG’s fiscal quarter that is two fiscal quarters prior to the most recently completed fiscal quarter
before that Determination Date; and
(ii) ZIG’s Adjusted Consolidated Shareholders’ Equity Amount as at the end of ZIG’s fiscal quarter that is two fiscal quarters
prior to the most recently completed fiscal quarter before that Determination Date has declined by 10 per cent or more as
compared to ZIG’s Adjusted Consolidated Shareholders’ Equity Amount at the end of the tenth fiscal quarter preceding
ZIG’s most recently completed fiscal quarter before that Determination Date; and
(iii) ZIG’s Adjusted Capital Amount as at the end of ZIG’s most recently completed fiscal quarter before that Determination Date
has declined by 10 per cent or more as compared to ZIG’s Adjusted Consolidated Shareholders’ Equity Amount at the end of
the tenth fiscal quarter preceding ZIG’s most recently completed fiscal quarter before that Determination Date.
A certificate as to the occurrence or continuation of a Trigger Event and as to the quantum of the relevant Trigger Event Shortfall, signed by two Authorised Officers of the Issuer or ZIG and which sets out the Issuer’s or ZIG’s determinations of the Trailing
Four Quarters Consolidated Net Income Amount, the Adjusted Consolidated Shareholders’ Equity Amount and the Adjusted
Capital Amount as at the dates aforesaid and that as a result, a Trigger Event shall have occurred shall, in the absence of manifest
error, be treated and accepted by the Issuer, ZIG, the Trustee, the Noteholders, the Couponholders and all other interested parties
as correct and sufficient evidence thereof and the Trustee shall be entitled to rely on such certification absolutely without liability
to any person.
“Adjusted Capital Amount” means the Adjusted Consolidated Shareholders’ Equity Amount plus Qualifying Mandatory
Convertibles.
“Adjusted Consolidated Shareholders’ Equity Amount” means, as at any quarter end and subject to the adjustments referred to
below, ZIG’s total consolidated shareholders’ equity excluding preferred securities, net unrealised gains (or losses) on investments and cumulative translation adjustments, as reflected on ZIG’s consolidated IFRS balance sheets as at such quarter end.
“IFRS” means, at any date and for any period, International Financial Reporting Standards as applied to, and reflected in, ZIG’s
consolidated financial statements as at the relevant dates and for the relevant periods.
“New Capital Amount” means, at any date, the net proceeds received by the Issuer or ZIG from new issuances (whether in one
or more public offerings or private placements) and/or sales of ordinary shares, during the period commencing on the 180th day
prior to such date and designated by the Issuer or ZIG at or before the time of issuance as available to pay Interest Payments on
the Capital Notes.
“Qualifying Mandatory Convertible” means, securities of ZIG or a subsidiary thereof (other than ordinary shares of ZIG) with (i) no prepayment obligation in respect of such securities on the part of the issuer thereof, whether at the election of the holders or
otherwise, and (ii) a requirement that such securities convert into ordinary shares of ZIG within three years from the date of their
issuance at a conversion ratio within a range established at the time of issuance of such securities.
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“Trailing Four Quarters Consolidated Net Income Amount” means, for any fiscal quarter and subject to the adjustments
referred to below, the sum of ZIG’s consolidated net income for the four fiscal quarters ending as at the last day of such fiscal
quarter.
If the conditions for a Trigger Event are satisfied for any Determination Date, the cancellation of interest will continue until that
Trigger Event has been deemed cured in the manner described below on a subsequent Determination Date. In addition, if
additional Trigger Events are triggered on one or more subsequent Determination Dates before the initial Trigger Event is deemed
cured (as described below), the cancellation of interest on the Capital Notes will continue until each such subsequent Trigger
Event has been deemed cured (as described below). After one or more Trigger Events have occurred or are continuing, the Issuer
may only begin to pay interest on the Capital Notes on any Interest Payment Date if on the relevant Determination Date (i) no new
Trigger Event has occurred and (ii) all of the previous Trigger Events have been deemed cured (as described below).
A Trigger Event that was triggered on a prior Determination Date (the “Previous Determination Date”) will be deemed to be cured as at a later Determination Date if ZIG’s Adjusted Capital Amount as at its most recently completed fiscal quarter before that later Determination Date has increased, or has declined by less than 10 per cent, as compared to ZIG’s Adjusted Consolidated Shareholders’ Equity Amount as at the end of the originally specified benchmark fiscal quarter for that Previous Determination Date. All financial terms used in this Condition 3(b) will be determined in accordance with IFRS. If because of a change in IFRS that results in a change in accounting principles or a restatement, ZIG’s Adjusted Consolidated Shareholders’ Equity Amount as at a fiscal quarter end is higher or lower than it would have been absent such change, then for the purpose of the calculation described in the preceding sentence, ZIG’s Adjusted Consolidated Shareholders’ Equity Amount will be calculated on a pro forma basis as if such change had not occurred. Upon satisfaction of the conditions described in this paragraph, the Issuer will provide a certificate, signed by two Authorised Officers of the Issuer, certifying that such conditions have been met and the Trigger Event has been deemed to be cured and the Trustee shall be entitled to rely on such certification absolutely without liability to any person. If Trigger Event is specified in the applicable Final Terms as being not applicable, then solely in respect of Interest Payments and without prejudice to Condition 2, such Capital Notes rank senior to any existing or future obligations of the Issuer (“other obligations”) that would otherwise have ranked pari passu with the Capital Notes, if and to the extent payment of such Interest Payments would otherwise be prohibited by any Restricted Payments Provision in such other obligations as a result of a Trigger Event Occurrence (as defined below) with respect to such other obligations. A “Trigger Event Occurrence” with respect to any obligation is the mandatory deferral or cancellation of the payment of any distributions (or similar payments) on that obligation as a result of any event or condition specified in the provisions of such obligation or any related transaction agreements, including the suspension or the cancellation of the payment of any distributions (or similar payments) from any source other than a specific source of funds, but excluding any such mandatory deferral or cancellation purely as a result of solvency event provisions analogous to those in Condition 3(a).
(c) Optional Deferral or Cancellation Condition 3(c) shall only apply in respect of a Capital Note where the applicable Final Terms specify that Optional Non-Payment is applicable. In addition to the obligation of the Issuer to defer or, as applicable, cancel interest in certain circumstances set out in, and in accordance with, Conditions 3(a) and 3(b), the Issuer may elect (if the applicable Final Terms specify the Capital Note as being Cumulative in relation to Optional Non-Payment) to defer, or (if the applicable Final Terms specify the Capital Note as being Non-Cumulative in relation to Optional Non-Payment) to cancel in whole or in part any Interest Payment which is otherwise scheduled to be paid on an Optional Interest Payment Date (as defined below) by giving written notice of such election to the Trustee, the Agent and to the Noteholders in accordance with Condition 13 not less than seven days prior to the relevant Interest Payment Date. If so specified in the applicable Final Terms, notwithstanding the other provisions of this Condition 3(c) but without prejudice to the provisions of Conditions 3(a) and 3(b), if as at any Optional Interest Payment Date FINMA or any Successor Authority no longer accords any regulatory capital credit to the Capital Notes under Applicable Regulations (as defined below) the Issuer will only be allowed to exercise its option under this Condition 3(c) to defer payments of interest on the Capital Notes on such Optional Interest Payment Date for up to five years (a “Fixed Term Deferred Interest Payment”), and the Issuer will only be allowed to exercise its option under this Condition 3(c) to cancel payments of interest on the Capital Notes on such Optional Interest Payment Date and each Optional Interest Payment Date falling in the period of five years following such first Optional Interest Payment Date, but not thereafter. Any Fixed Term Deferred Interest Payment shall fall due on the relevant APM Deferred Settlement Date, or, as applicable, Cash Deferred Settlement Date or, if earlier, the fifth anniversary of the Optional Interest Payment Date on which such payment was deferred. Noteholders shall have no entitlement to, or claim for, any Interest Payment or, as appropriate, any part thereof cancelled pursuant to this Condition 3(c) and, for the avoidance of doubt, such sum shall not constitute Deferred Interest hereunder and such cancellation shall not constitute a Dissolution Event by the Issuer or any other breach or default under the Capital Notes or for any other purpose. Any Interest Payment, or, as appropriate, any part thereof, deferred pursuant to this Condition 3(c), is referred to herein as “Optionally Deferred Interest” and, together with Solvency Deferred Interest , as “Deferred Interest”.
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If payment of an Interest Payment, or as appropriate, any part thereof, is deferred pursuant to Condition 3(c), the Issuer shall not
have any obligation to pay such Interest Payment, or as appropriate, part thereof on the relevant Optional Interest Payment Date
and the failure to pay such Interest Payment, or as appropriate, part thereof shall not constitute a Dissolution Event by the Issuer or
any other breach or default under the Capital Notes or for any other purpose.
As used above, “Optional Interest Payment Date” means any Interest Payment Date in respect of which during the six month
period ending thereon, but subject as provided in the next paragraph, (i) no dividend has been declared or paid on any class of
share capital of ZIG; and (ii) (provided at the relevant time the existence of this requirement (ii) does not cause a Regulatory
Event) no interest, distribution or other payments (including payment for the purpose of a redemption or repurchase) have been
made on any securities issued (or guaranteed) by (a) ZIC as the relevant Issuer or Guarantor and the claims in respect of such
securities or, as applicable, guarantee rank junior to, or pari passu with, the claims of Noteholders; or (b) ZIG (unless, in each
case aforesaid, such payment was compulsory on such securities or required due to the repayment of such securities).
Notwithstanding the immediately preceding paragraph, any Interest Payment Date which would otherwise not be an Optional
Interest Payment Date by reason of one or more of the following events shall be treated as an Optional Interest Payment Date:
(aa) repurchases, redemptions or other acquisitions of ZIG’s ordinary shares in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or
consultants, in connection with a dividend reinvestment or shareholder stock purchase plan or in connection with the
issuance of ZIG’s ordinary shares (or securities convertible into or exercisable for ZIG’s ordinary shares) as
consideration in an acquisition transaction entered into prior to the applicable deferral period;
(bb) as a result of any exchange or conversion of any class or series of ZIG’s ordinary shares (or any capital stock of any of its
subsidiaries) for any class or series of common stock or of any class or series of its indebtedness (or for the indebtedness
of any of its subsidiaries);
(cc) the purchase of fractional interests in ZIG’s ordinary shares, pursuant to the conversion or exchange provisions of such ZIG ordinary shares, or the security being converted or exchanged;
(dd) any declaration of a dividend in connection with any shareholders’ rights plan, or the issuance of rights, stock or other
property under any shareholders’ rights plan, or the redemption or repurchase of rights pursuant thereto;
(ee) any dividend or distribution in the form of stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being
paid or ranks pari passu with or junior to such stock; or
(ff) payments of interest on any Parity Obligations and the Capital Notes rateably and in proportion to the respective amounts
as at such Interest Payment Date of (y) accrued and unpaid interest on such Parity Obligations, on the one hand, and (z) if applicable, Deferred Interest and any other accrued and unpaid interest on the Capital Notes, on the other hand.
(d) Payment Restrictions following Deferral or Cancellation
In the case of a Capital Note where the applicable Final Terms specify that this Condition 3(d) applies but not otherwise, the
Issuer and ZIG agree that if an Interest Payment has not been paid in full for an Interest Period by reason of Conditions 3(a), (b) or
(c), then, subject as provided below, in the case of a Capital Note where the applicable Final Terms provide that it is Cumulative
with respect to events specified under Conditions 3(a), or (c), for so long as any such Deferred Interest remains outstanding and, in
the case of a Capital Note where the applicable Final Terms provide that it is Non-Cumulative with respect to events specified
under Conditions 3(a) or (c), and in the case of a Capital Note where the relevant Interest Payment has been cancelled by reason of
Condition 3(b), until the next payment of an Interest Payment in full, and in each case subject as provided below, (v) ZIG will not,
nor will it permit any of its subsidiaries to, make any discretionary payment of principal, interest or premium, if any, on or repay, purchase or redeem any ZIG Subordinated Debt (as defined below); (w) ZIG will not, nor will it permit any of its subsidiaries to,
make any discretionary guarantee payments with respect to any of its guarantees of the securities of any of its subsidiaries if such
guarantee ranks pari passu with, or junior to, any ZIG Subordinated Debt; (x) ZIG will not, and will not permit any of its
subsidiaries to, redeem, purchase or acquire, or make a liquidation payment with respect to, any of ZIG’s ordinary shares and any
of its other capital stock that may then exist; (y) the Issuer will not, nor will it permit any of its subsidiaries to redeem any of its
securities that rank pari passu with, or junior to, the Capital Notes; and (z) the Issuer will not, nor will it permit any of its
subsidiaries to, make any discretionary guarantee payments with respect to any of its guarantees of the securities of any of its
subsidiaries if such guarantee ranks pari passu with, or junior to, the Capital Notes.
As used herein “ZIG Subordinated Debt” means obligations of ZIG which rank or are expressed to rank junior to any senior,
unsubordinated obligations of ZIG.
The restrictions set out above in this Condition 3(d) shall not apply to:
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(i) repurchases, redemptions or other acquisitions of ZIG’s ordinary shares in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or
consultants, in connection with a dividend reinvestment or shareholder stock purchase plan or in connection with the
issuance of ZIG’s ordinary shares (or securities convertible into or exercisable for ZIG’s ordinary shares) as consideration in an acquisition transaction entered into prior to the applicable deferral period;
(ii) as a result of any exchange or conversion of any class or series of ZIG’s ordinary shares (or any capital stock of any of
its subsidiaries) for any class or series of common stock or of any class or series of its indebtedness (or for the
indebtedness of any of its subsidiaries);
(iii) the purchase of fractional interests in ZIG’s ordinary shares, pursuant to the conversion or exchange provisions of such
ZIG ordinary shares, or the security being converted or exchanged;
(iv) any declaration of a dividend in connection with any shareholders’ rights plan, or the issuance of rights, stock or other
property under any shareholders’ rights plan, or the redemption or repurchase of rights pursuant thereto;
(v) any dividend or distribution in the form of stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being
paid or ranks pari passu with or junior to such stock; or
(vi) payments of interest on any Parity Obligations and the Capital Notes rateably and in proportion to the respective
amount of (aa) accrued and unpaid interest on such Parity Obligations, on the one hand, and (bb) if applicable, Deferred
Interest and any other accrued and unpaid interest on the Capital Notes, on the other hand.
Further, the restrictions in (y) and (z) above shall not apply in the cases of (i) a Trigger Event in relation to Capital Notes where the securities otherwise ranking pari passu with the Capital Notes do not themselves contain a similar mandatory deferral or cancellation feature, (ii) where Intention Statement is applicable and the securities otherwise ranking pari passu with the Capital Notes themselves contain a Commercially Reasonable Efforts provision, (iii) a Solvency Event in relation to Capital Notes where the securities otherwise ranking pari passu with the Capital Notes do not themselves contain a substantially similar solvency event, (iv) interest becoming mandatorily due on such securities due to a provision analogous to provisions in Condition 3(e) below or otherwise where the terms of such securities do not permit the deferral of interest, or (v) at maturity of such securities. In the event of any of (i) to (iv) of this paragraph being applicable, the Issuer and ZIG will each provide a certificate signed by two Authorised Officers to the Trustee, the Agent and the Noteholders certifying which of (i) to (iv) above applies and that, as a result, the restrictions in (y) and (z) shall not apply which the Trustee shall rely on absolutely without liability to any person. For the avoidance of doubt, Deferred Interest does not itself bear interest.
(e) Settlement of Deferred Interest If the applicable Final Terms specify that Cash Settlement is applicable, the Issuer may (subject as provided below) elect at any time upon the expiry of not less than seven days’ written notice to such effect given by the Issuer to the Trustee, the Agent and, in accordance with Condition 13, the Noteholders, to pay in cash in whole or in part any Deferred Interest. However, any outstanding Deferred Interest will (subject as provided below) become immediately due and payable in cash in full (or in the case where limb (iv) of the definition of APM Deferred Settlement Date is specified as applying as part of the definition of Cash Deferred Settlement Date, on a proportionate basis) upon the Cash Deferred Settlement Date (as defined below). Notwithstanding the foregoing, Deferred Interest shall only be due and payable if at the relevant time the prior written approval of FINMA or any Successor Authority to such payment has been given (if such approval is required under Applicable Regulations at the relevant time). If on the Cash Deferred Settlement Date no prior written approval as aforesaid has been given (if such approval is required under Applicable Regulations at the relevant time), the relevant Deferred Interest will be due and payable promptly following the obtaining of such written approval (if such approval is required under Applicable Regulations at the relevant time) and the giving of not more than 30 nor less than 15 days’ notice to such effect by the Issuer to the Trustee and to Noteholders in accordance with Condition 13. References herein to “Cash Deferred Settlement Date” shall be construed accordingly to refer to such later date for payment. If the applicable Final Terms specify that APM Settlement is applicable, the Issuer and ZIG may (subject as provided below in relation to Deferred Interest) elect at any time upon the expiry of not less than seven days’ written notice to such effect given by the Issuer to the Trustee, the Agent and, in accordance with Condition 13, the Noteholders, to use their commercially reasonable efforts to satisfy in whole or in part any Deferred Interest utilising the APM (as defined below) (subject to the limitations and conditions applicable to the APM) and, unless Deferred Interest has already been satisfied pursuant to the APM or cancelled in accordance with the applicable Final Terms, the Issuer and ZIG shall (subject as provided below in relation to Deferred Interest) use their commercially reasonable efforts to apply the APM (subject to the limitations and conditions applicable to the APM) to satisfy all (or, in the case where limb (iv) of the definition of APM Deferred Settlement Date applies, on a proportionate basis) of the outstanding Deferred Interest upon the APM Deferred Settlement Date (as defined below). If the applicable Final Terms specify that APM Settlement is applicable in respect of Relevant Solvency Deferred Interest only, the Issuer and ZIG may (subject as provided below in relation to Relevant Solvency Deferred Interest) elect at any time upon the
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expiry of not less than seven days’ written notice to such effect given by the Issuer to the Trustee, the Agent and, in accordance with Condition 13, the Noteholders, to use their commercially reasonable efforts to satisfy in whole or in part any Relevant Solvency Deferred Interest utilising the APM (as defined below) (subject to the limitations and conditions applicable to the APM) and, unless Relevant Solvency Deferred Interest has already been satisfied pursuant to the APM or cancelled in accordance with the applicable Final Terms, the Issuer and ZIG shall (subject as provided below in relation to Deferred Interest) use their commercially reasonable efforts to apply the APM (subject to the limitations and conditions applicable to the APM) to satisfy all (or, in the case where limb (iv) of the definition of APM Deferred Settlement Date applies, on a proportionate basis) of the outstanding Relevant Solvency Deferred Interest upon the APM Deferred Settlement Date (as defined below). Notwithstanding the foregoing, the Issuer and ZIG will only be obliged to use their commercially reasonable efforts to satisfy any Deferred Interest or Relevant Solvency Deferred Interest, as applicable, as aforesaid if at the relevant time the prior written approval of FINMA or any Successor Authority to such payment has been given. If on the APM Deferred Settlement Date no prior written approval as aforesaid has been given, the Issuer and ZIG shall be obliged to use their commercially reasonable efforts to satisfy any Deferred Interest or Relevant Solvency Deferred Interest, as applicable, promptly following the obtaining of such written approval and the giving of not more than 30 nor less than 15 days’ notice to such effect by the Issuer to the Trustee and to Noteholders in accordance with Condition 13. References herein to “APM Deferred Settlement Date” shall be construed accordingly to refer to such later date for payment. A certificate as to whether or not written approval of FINMA or any Successor Authority as aforesaid has been given signed by two Authorised Officers of the Issuer or ZIG, shall, in the absence of manifest error, be treated and accepted by the Issuer, the Noteholders, the Trustee, the Couponholders and all other interested parties as correct and sufficient evidence thereof. The Trustee shall be entitled to rely upon such certification absolutely without liability to any person.
As used herein:
“APM Deferred Settlement Date” means, subject as provided above and in Condition 3(c) in relation to Fixed Term Deferred Interest Payments, the first to occur of the following dates:
(i) the date on which the Capital Notes are called for redemption pursuant to Condition 6 or substituted or varied pursuant to Condition 6(e);
(ii) the date upon which a dividend is next declared or paid on any class of share capital of ZIG; (iii) (A) as soon as practicable after cash proceeds representing the full amount of Deferred Interest or Relevant Solvency
Deferred Interest, as applicable, have been realised from the APM which will be implemented following the declaration or payment by ZIG of any dividends or other payments (including any nominal value reduction under Swiss law) on any of its ordinary shares or on any of its other capital stock that may then exist, except in the circumstances described in subparagraphs (i) to (v) of the fourth paragraph of Condition 3(d) or (B) in the event that the Ordinary Share Issuance Threshold, as applicable, has been met or a Market Disruption Event has occurred, in each case prior to the realisation of the full amount of Deferred Interest or Relevant Solvency Deferred Interest, as applicable, from such APM, in an amount equal to the actual cash proceeds realised at the time such threshold has been met or such Market Disruption Event has occurred, as applicable;
(iv) the Interest Payment Date next following a full or partial payment of current or deferred interest on any Parity
Obligation (except for any such current or deferred interest payment of which is compulsory in accordance with the terms of the relevant Parity Obligation (including as a result of the maturity of such obligation)), in which case the relevant proportion shall be equal to the result from the division of the amount of the full or partial payment actually paid on the Parity Obligation by the outstanding amount (current or deferred) of the payment to which such full or partial payment relates that is payable on the Parity Obligation when such payment is made in full (for the avoidance of doubt, the terms of other obligations issued by the Issuer may be such as not to make them qualify as Parity Obligations specifically for these purposes);
(v) the date on which the Issuer is dissolved pursuant to Article 736 of the Swiss Code of Obligations (other than for the
purposes of, or pursuant to, an amalgamation, reorganisation or restructuring whilst solvent, where the continuing entity assumes substantially all of the assets and obligations of the Issuer); or
(vi) if none of the events referred to in (i), (ii), (iii), (iv) or (v) above have already occurred and the applicable Final Terms
so provide, upon expiration of the time period specified in the applicable Final Terms following the date upon which deferral of the relevant Deferred Interest or Relevant Solvency Deferred Interest commenced.
“Cash Deferred Settlement Date” means, subject as provided above and in Condition 3(c) in relation to Fixed Term Deferred
Interest Payments, the first to occur of the dates specified in paragraphs (i), (ii), (v) and, if so specified in the applicable Final Terms, (iv) and/or (vi) of the definition of “APM Deferred Settlement Date” above. If limb (vi) of the definition of APM Deferred
Settlement Date is specified in the applicable Final Terms as being applicable in the context of the definition of either APM
Deferred Settlement Date or Cash Deferred Settlement Date and the Issuer and ZIG become obliged to pay or, as appropriate, use
their commercially reasonable efforts to satisfy Deferred Interest by way of the APM, as a result of limb (vi) of the definition of
APM Deferred Settlement Date, then solely in respect of such Interest Payment and without prejudice to Condition 2, the Capital
Notes rank senior to any existing or future obligations of the Issuer (“other obligations”) that would otherwise have ranked pari
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passu with the Capital Notes, if and to the extent payment of such Deferred Interest would otherwise be prohibited by any
Restricted Payments Provision in such other obligations as a result of interest being outstanding with respect to such other
obligations.
In relation to Optionally Deferred Interest or Solvency Deferred Interest, if limb (vi) above is not specified in the applicable Final Terms as being applicable and if none of the events in limb (i) to (v) of such definition take place prior to the date specified in the applicable Final Terms for this purpose following the Interest Payment Date on which such Optionally Deferred Interest or Solvency Deferred Interest was originally deferred, the Issuer and ZIG intend to raise sufficient proceeds from the operation of the APM to satisfy any Optionally Deferred Interest or Solvency Deferred Interest.
Alternative Payment Mechanism
The Issuer may elect at its discretion to satisfy on the relevant Interest Payment Date any Interest Payment that would otherwise
have been due on such Interest Payment Date without application of Conditions 3(a), 3(b) and 3(c) with funds raised prior to the
Interest Payment Date by way of an APM (as defined in Condition 3(e)).
If APM Settlement (as aforesaid) is applicable, the Issuer and ZIG shall satisfy their obligations in respect of Deferred Interest
which falls due by way of the alternative payment mechanism (the “APM”), on the relevant APM Deferred Settlement Date, by
the operation of Ordinary Share Settlement.
“Ordinary Share Settlement” means using cash proceeds from the sale, during the period of six months immediately prior to the
relevant APM Deferred Settlement Date (the “Relevant Period”), of existing or newly issued ordinary shares of ZIG (the
“Payment Shares”) which proceeds are made available by ZIG to the Issuer to make the relevant payment.
If APM Settlement (as aforesaid) is applicable, the Issuer shall (except in the case of a voluntary or involuntary insolvency,
winding up, liquidation, dissolution or other similar proceedings of or against the Issuer) satisfy its obligations in respect of
Deferred Interest only by operation of the APM in accordance with this Condition 3(e).
In the event of the Issuer and ZIG satisfying their obligations in respect of Deferred Interest by operation of the APM the Issuer
shall certify, by delivering to the Trustee a certificate signed by two Authorised Officers of the Issuer, that in making use of such
APM, the Issuer or ZIG was in compliance with its obligations under this Condition 3(e) which the Trustee shall rely on
absolutely without liability to any person.
As used herein, “Qualifying APM Securities” means ordinary shares of ZIG (including, to the extent available, treasury stock
purchased at least six months prior to the date of sale of such treasury stock).
Restrictions relating to the APM
Upon the Issuer and ZIG becoming obliged to use their commercially reasonable efforts to settle Deferred Interest using the APM
pursuant to this Condition 3(e), the Issuer and ZIG will use their commercially reasonable efforts to satisfy such Deferred Interest
by way of Ordinary Share Settlement. The Issuer and ZIG may only utilise the Ordinary Share Settlement to the extent that the
number of Payment Shares used for the purposes of the APM in any 12-month period does not exceed 2 per cent (“Ordinary Share Issuance Threshold”) of ZIG’s outstanding share capital.
In the event of the Issuer and ZIG satisfying their obligations in respect of Deferred Interest by utilisation of Ordinary Share
Settlement, the Issuer shall certify, by delivering to the Trustee a certificate signed by two Authorised Officers of the Issuer, that
the Ordinary Share Issuance Threshold has not been exceeded which the Trustee shall rely on absolutely without liability to any
person.
Periods of Application of the APM
Once the Issuer and ZIG have become obliged hereunder to use their respective commercially reasonable efforts to operate the
APM to settle any Optionally Deferred Interest, Solvency Deferred Interest or Relevant Solvency Deferred Interest, the Issuer and
ZIG shall continue to use their respective commercially reasonable efforts to raise sufficient proceeds from the operation of the
APM for up to the period specified in the applicable Final Terms for this purpose following the relevant Deferred Settlement Date
to the extent permitted under prevailing applicable regulatory criteria governing the Capital Notes. If there exists, in the Issuer’s
reasonable opinion, a Market Disruption Event (as defined below), then the specified period described above shall be extended by
a period equal to the time during which the Market Disruption Event exists plus 60 Zurich business days.
If the applicable Final Terms provide that Intention Statement is applicable, then the applicable Final Terms shall specify the
period for which the Issuer and ZIG intend to continue voluntarily to operate the APM if for any reason this has not occurred within the original period of 30 days from the Interest Payment Date in relation to which a Trigger Event is occurring.
If and to the extent that the Issuer and/or ZIG have not issued Qualifying APM Securities to settle any Deferred Interest or
Relevant Solvency Deferred Interest, as applicable, in full within such specified time period, or, if such time periods do not
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otherwise apply, upon expiration of the period specified in the applicable Final Terms for this purpose after the date on which
such Deferred Interest or Relevant Solvency Deferred Interest, as applicable, was originally deferred, the Issuer’s obligation with
respect to such unsettled Deferred Interest or Relevant Solvency Deferred Interest, as applicable, will be cancelled.
As used herein “Market Disruption Event” means the occurrence or existence of any of the following events or sets of
circumstances: (i) the trading in the shares of ZIG generally on any internationally recognised exchange on which such securities
are traded has been suspended or the settlement of such trading generally shall have been materially disrupted; (ii) a general
moratorium shall have been declared on commercial banking activities or securities settlement systems in Switzerland, the U.S.,
the U.K. or the region comprised of member states of the European Union that adopted the euro in accordance with the Treaty
establishing the European Community of 25 March 1957, as amended, as a result of which trading in shares of ZIG has been
materially disrupted; (iii) there shall have occurred a change, event or circumstance that could be expected to result in a
prospective change in Swiss taxation materially and adversely affecting the Issuer or ZIG, the ordinary shares of ZIG or the
imposition of exchange controls by Switzerland; or (iv) there shall have occurred an outbreak or escalation of hostilities, any
terrorist attacks or calamity or crisis, or any change or development involving or likely to involve a prospective change in national
or international financial, political or economic conditions in any country, as a result of which trading in shares of ZIG has been materially disrupted. The Trustee shall be entitled to rely absolutely without liability to any person on a certificate given to it by
two Authorised Officers of the Issuer as to the occurrence in the Issuer’s reasonable opinion of a Market Disruption Event.
4. Interest
(a) Interest on Fixed Rate Capital Notes
Each Fixed Rate Capital Note bears interest on its outstanding nominal amount from (and including) the Interest Commencement
Date at the rate(s) per annum equal to the Rate(s) of Interest payable in arrear on the Interest Payment Date(s) in each year and (if
applicable) on the Maturity Date or other date fixed for redemption if that does not fall on an Interest Payment Date.
Subject to Condition 3, the amount of interest payable on each Interest Payment Date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken
Amount so specified.
If interest is required to be calculated for a period ending other than on an Interest Payment Date, such interest shall be calculated
by applying the Rate of Interest to each calculation amount as specified in the applicable Final Terms (“Calculation Amount”)
multiplying such sum by the applicable Fixed Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the
relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market
convention.
For the purposes of these Conditions “Fixed Day Count Fraction” means:
(i) if “Actual/Actual (ICMA)” is specified in the applicable Final Terms:
(a) where the relevant period (from and including the first day to but excluding the last day) is equal to or shorter than the
Regular Period during which it falls, the actual number of days in the relevant period divided by the product of (1) the
actual number of days in such Regular Period and (2) the number of Regular Periods normally ending in any year; and
(b) where the relevant period (from and including the first day to but excluding the last day) is longer than one Regular
Period, the sum of:
(A) the actual number of days in such relevant period falling in the Regular Period in which it begins divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and
(B) the actual number of days in such relevant period falling in the next Regular Period divided by the product of
(1) the actual number of days in such Regular Period and (2) the number of Regular Periods normally ending in any year;
(ii) if “30/360” is specified in the applicable Final Terms, the number of days in the period from and including the most recent
Interest Payment Date (or, if none, the Interest Commencement Date) to but excluding the relevant payment date (such number of days being calculated on the basis of 12 30-day months) divided by 360; and
“Regular Period” means:
(i) in the case of Capital Notes where interest is scheduled to be paid only by means of regular payments, each period from and
including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date;
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(ii) in the case of Capital Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls; and
(iii) in the case of Capital Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to
be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period.
“sub-unit” with respect to any currency other than euro, means the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent.
If the applicable Final Terms specify that a Mid Swap Rate is applicable to interest payable on Interest Payment Dates falling in a
specified period (the “Reset Period”), the Capital Notes will bear interest during such Reset Period at a rate determined on the
Reset Determination Date as being the aggregate of the Reset Margin and the Specified Mid Swap Rate. The Specified Mid Swap
Rate shall be the mid market swap rate for the Specified Swap Duration, expressed as a percentage, which appears on the Mid
Swap Rate Screen Page (or such other page as may replace that page, or such other service as may be nominated by the person
providing or sponsoring the information appearing there for the purpose of displaying comparable rates) at 11.00 a.m. (local time) on the Reset Determination Date. If swap rates do not appear on that page, the Specified Mid Swap Rate shall be determined by
the Swap Rate Determination Agent (which, unless otherwise specified in the applicable Final Terms, shall be the Agent) on the
basis of (i) quotations provided by the principal office of each of four major banks in the relevant swap market of the rates at
which swaps in the applicable currency are offered by it at approximately 11.00 a.m. (local time) on the Reset Determination Date
to participants in the relevant swap market for the period equal to the Specified Swap Duration; and (ii) the arithmetic mean
rounded, if necessary, to the nearest 0.00001 (0.000005 being rounded upwards) of such quotations.
The Swap Rate Determination Agent will at, or as soon as practicable after, each time at which the Specified Mid Swap Rate is to
be determined, determine the Specified Mid Swap Rate for the relevant Reset Period and notify the Agent as soon as practicable
after determining the same.
The Agent will cause the Specified Mid Swap Rate to be notified to the relevant Issuer and any stock exchange on which the relevant Capital Notes are for the time being listed and notice thereof to be published in accordance with Condition 13 as soon as
possible after their determination but in no event later than the fourth London Business Day (as defined below) thereafter.
If for any reason the Swap Rate Determination Agent at any time after the Issue Date defaults in its obligation to determine the
Specified Mid Swap Rate, the Trustee shall determine the Specified Mid Swap Rate at such rate as, in its absolute discretion
(having such regard as it shall think fit to the foregoing provisions of this Condition, but subject always to any minimum or
maximum Rate of Interest specified in the applicable Final Terms), it shall deem fair and reasonable in all the circumstances and
any such determination shall be deemed to have been made by the Swap Rate Determination Agent.
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions of this Condition 4(a), whether by the Swap Rate Determination Agent or the Trustee, shall (in the absence of wilful default, bad faith or manifest error) be binding on the relevant Issuer, ZIC (where ZIC is not the
relevant Issuer), the Trustee, the Agent, the Swap Rate Determination Agent, the other Paying Agents, the Registrar and any
Transfer Agents and all Noteholders and Couponholders and (in the absence as aforesaid) no liability to the relevant Issuer, ZIC
(where ZIC is not the relevant Issuer), the Noteholders or the Couponholders shall attach to the Agent, the Trustee or the Swap
rate Determination Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to
such provisions.
(b) Interest on Floating Rate Capital Notes
(i) Interest Payment Dates Each Floating Rate Capital Note bears interest on its nominal amount from (and including) the Interest Commencement Date and such interest will be payable, subject to Condition 3, in arrear on either: (a) the Interest Payment Date(s) in each year specified in the applicable Final Terms; or (b) if no express Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each an “Interest Payment
Date”) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.
Such interest will be payable, subject to Condition 3, in respect of each Interest Period (which expression shall, in these Terms and Conditions, mean the period from (and including) the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from (and including) an Interest Payment Date to but excluding the next Interest Payment Date).
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If the business day convention is specified in the applicable Final Terms and if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the business day convention specified is: (1) in any case where Specified Periods are specified in accordance with Condition 4(b)(i)(b) above, the Floating Rate
Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls in the Specified Period after the preceding applicable Interest Payment Date occurred; or
(2) the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business
Day; or
(3) the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be
brought forward to the immediately preceding Business Day; or
(4) the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding
Business Day.
In this Condition, “Business Day” means a day which is both:
(a) a day on which commercial banks and foreign exchange markets settle payments in any Additional Business Centre
specified in the applicable Final Terms; and
(b) either (1) in relation to interest payable in Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments in the principal financial centre of the country of the relevant Specified Currency (if other
than any Additional Business Centre) or (2) in relation to interest payable in euro, a day on which the TARGET system is
operating.
For the purposes of these Conditions “TARGET system” means the Trans-European Automated Real-Time Gross Settlement
Express Transfer, known as TARGET 2, System which was launched on 19 November 2007 or any successor thereto.
(ii) Rate of Interest
The Rate of Interest payable from time to time in respect of Floating Rate Capital Notes will be determined in the manner
specified in the applicable Final Terms.
(A) ISDA Determination for Floating Rate Capital Notes
Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be
determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the
applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (A), “ISDA Rate” for an Interest Period
means a rate equal to the Floating Rate that would be determined by the Agent under an interest rate swap transaction if the
Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the ISDA
2006 Definitions, as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as
at the Issue Date of the first Tranche of the Capital Notes (the “ISDA Definitions”) and under which:
(1) the Floating Rate Option is as specified in the applicable Final Terms;
(2) the Designated Maturity is a period specified in the applicable Final Terms; and
(3) the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on the London inter-bank offered
rate (“LIBOR”) or the European inter-bank offered rate (“EURIBOR”) for a currency, the first day of that Interest
Period or (ii) in any other case, as specified in the applicable Final Terms.
For the purposes of this sub-paragraph (A), “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those terms in the ISDA Definitions.
When this sub-paragraph (A) applies, in respect of each relevant Interest Period the Agent will be deemed to have discharged its obligations under Condition 4(b)(iv) in respect of the determination of the Rate of Interest if it has determined the Rate of
Interest in respect of such Interest Period in the manner provided in this sub-paragraph (A).
(B) Screen Rate Determination for Floating Rate Capital Notes
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Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to
be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either:
(1) the offered quotation; or
(2) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the
offered quotations,
(expressed as a percentage rate per annum) for the Reference Rate (being either LIBOR or EURIBOR as specified in the
applicable Final Terms) which appears or appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London
time or in the case of EURIBOR, Brussels time) on the Interest Determination Date in question plus or minus (as indicated in
the applicable Final Terms) the Margin (if any), all as determined by the Agent. If five or more of such offered quotations
are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such
quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be
disregarded by the Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
The Agency Agreement contains provisions for determining the Rate of Interest in the event that the Relevant Screen Page is
not available or if, in the case of (1) above, no such quotation appears or, in the case of (ii) above, fewer than three such
offered quotations appear, in each case as at the time specified in the preceding paragraph.
(iii) Minimum and/or Maximum Interest Rate
If the applicable Final Terms specify a Minimum Interest Rate for any Interest Period, then, in the event that the Rate of Interest in
respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is less than such Minimum
Interest Rate, the Rate of Interest for such Interest Period shall be such Minimum Interest Rate.
If the applicable Final Terms specify a Maximum Interest Rate for any Interest Period, then, in the event that the Rate of Interest
in respect of such Interest Period determined in accordance with the provisions of paragraph (ii) above is greater than such
Maximum Interest Rate, the Rate of Interest for such Interest Period shall be such Maximum Interest Rate.
(iv) Determination of Rate of Interest and Calculation of Interest Amounts
The Agent will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of
Interest for the relevant Interest Period.
The Agent will calculate the amount of interest (the “Interest Amount”) payable on the Floating Rate Capital Notes in respect of
each Calculation Amount for the relevant Interest Period.
Each Interest Amount shall be calculated by applying the Rate of Interest to each Calculation Amount, multiplying such sum by
the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency,
half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention.
“Day Count Fraction” means, in respect of the calculation of an amount of interest of any Interest Period:
(A) if “Actual/Actual” or “Actual/Actual/ISDA” is specified in the applicable Final Terms, the actual number of days in the
Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of (A) the actual number
of days in that portion of the Interest Period falling in a leap year divided by 366 and (B) the actual number of days in that
portion of the Interest Period falling in a non-leap year divided by 365);
(B) if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by
365;
(C) if “Actual/360” is specified in the applicable Final Terms, the actual number of days in the Interest Period divided by 360;
(D) if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period
divided by 360, calculated on a formula basis as follows:
Day Count Fraction = [360 x (Y(2) – Y(1))] + [30 x (M(2) – M(1))] + (D(2) – D(1))
360
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
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“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation
Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the
Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which
case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period,
unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(E) if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the number of days in the Interest Period
divided by 360, calculated on a formula basis as follows:
Day Count Fraction = [360 x (Y(2) – Y(1))] + [30 x (M(2) – M(1))] + (D(2) – D(1))
360
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation
Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the
Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of
February or (ii) such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period,
unless (i) that day is the last day of February or (ii) such number would be 31, in which case D2 will be 30; and
(F) if “30E/360 (ISDA)” is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a
formula basis as follows:
Day Count Fraction = [360 x (Y(2) – Y(1))] + [30 x (M(2) – M(1))] + (D(2) – D(1))
360
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the
Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of
February or (ii) such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D2 will be 30.
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(v) Notification of Rate of Interest and Interest Amounts
The Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment
Date to be notified to the Issuer and any stock exchange on which the relevant Floating Rate Notes are for the time being listed and notice thereof to be published in accordance with Condition 13 as soon as possible after their determination but in no event
later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification to such
exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth London Business Day (as defined below)
after such determination. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or
appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening
of the Interest Period. Any such amendment will be promptly notified to each stock exchange, listing authority and/or quotation
system by which the relevant Floating Rate Capital Notes are for the time being admitted to listing, trading and/or quotation and to
the Noteholders in accordance with Condition 13. In these Conditions “London Business Day” means a day (other than a
Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London.
(vi) Determination or Calculation by Trustee
If for any reason the Agent at any time after the Issue Date defaults in its obligation to determine the Rate of Interest or the Agent
defaults in its obligation to calculate any Interest Amount in accordance with paragraphs (ii) and (iv) above, the Trustee shall
determine the Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the foregoing
provisions of this Condition, but subject always to any minimum or maximum Rate of Interest specified in the applicable Final
Terms), it shall deem fair and reasonable in all the circumstances or, as the case may be, the Trustee shall calculate the Interest
Amount(s) in such manner as it shall deem fair and reasonable in all the circumstances and each such determination or calculation
shall be deemed to have been made by the Agent.
(vii) Certificates to be Final
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4(b), whether by the Agent or the Trustee shall (in the absence of
wilful default, bad faith or manifest error) be binding on the Issuer, the Trustee, the Agent, the other Paying Agents, the Registrar
and any Transfer Agents and all Noteholders and Couponholders and (in the absence as aforesaid) no liability to the Issuer, the
Noteholders or the Couponholders shall attach to the Agent or the Trustee in connection with the exercise or non-exercise by it of
its powers, duties and discretions pursuant to such provisions.
(c) Accrual of Interest Each Capital Note (or, in the case of the redemption of part only of a Capital Note, that part only of such Capital Note) will cease
to bear interest (if any) from the date for its redemption unless, upon due presentation thereof, payment of principal is improperly
withheld or refused In such event, interest will continue to accrue as provided in the Trust Deed.
(d) Recalculation of Interest
If a tax deduction or withholding (collectively, a “Tax Deduction”) is required by law to be made by the Issuer in respect of any
interest payable in respect of the Capital Notes and should Condition 7(a) be unlawful for any reason, the applicable Rate of
Interest in relation to Interest Amounts payable for the period ending on that Interest Payment Date will, subject to the exceptions
in Condition 7(b), be the Rate of Interest which would have otherwise been payable for the period ending on that Interest Payment
Date divided by 1 minus the rate (expressed as a fraction of 1) at which the relevant Tax Deduction is required to be made and the
Issuer will (i) be obligated to pay the relevant Interest Amount on that Interest Payment Date at the adjusted rate in accordance
with this Condition 4(d) and (ii) make the Tax Deduction on the recalculated interest amount. Without prejudice to the foregoing,
all references to a Rate of Interest in the Conditions shall be construed accordingly and all provisions in Condition 7 (other than
Condition 7(a)) shall apply to the Tax Deduction on the recalculated interest payment (such recalculation is referred to herein as a “Recalculation of Interest”).
5. Payments
(a) Method of Payment
Subject as provided below:
(i) payments in a Specified Currency other than euro will be made by transfer to an account in the relevant Specified Currency
maintained by the payee with, or by a cheque in such Specified Currency drawn on, a bank in the principal financial centre
of the country of such Specified Currency (which, if the Specified Currency is New Zealand dollars, shall be Auckland); and
(ii) payments in euro will be made by credit or transfer to an euro account specified by the payee.
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Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto in any jurisdiction (whether by
operation of law or agreement of the Issuer or its Agents and neither the Issuer or its Agents will be liable for any taxes or duties
of whatever nature imposed or levied by such laws, regulations, directives or agreements), but without prejudice to the provisions
of Condition 7. References to “Specified Currency” will include any successor currency under applicable law.
(b) Presentation of Capital Notes and Coupons
Payments of principal in respect of Definitive Bearer Notes will (subject as provided below) be made in the manner provided in
Condition 5(a) above only against presentation and surrender (or, in the case of part payment only, endorsement) of Definitive
Bearer Notes, and payments of interest in respect of Definitive Bearer Notes will (subject as provided below) be made as aforesaid
only against presentation and surrender (or, in the case of part payment only, endorsement) of Coupons, in each case at the
specified office of any Paying Agent outside the U.S. (which expression, as used herein, means the United States of America
(including the States and the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)).
Upon the date on which any Capital Note in definitive bearer form becomes due and repayable, unmatured Coupons and Talons
(if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further
Coupons shall be made in respect thereof. Where any such Definitive Bearer Note is presented for redemption without all
unmatured Coupons or Talons relating to it, redemption shall be made only against the provision of such indemnity as the Issuer
may require.
If the due date for redemption of any Definitive Bearer Note is not a Fixed Interest Date or an Interest Payment Date, interest (if
any) accrued in respect of such Definitive Bearer Note from (and including) the preceding Fixed Interest Date or Interest Payment
Date or, as the case may be, the Interest Commencement Date shall, subject to Condition 3, be payable only against presentation
and surrender (or, in the case of part payment only, endorsement) of the relevant Definitive Bearer Note.
Payments of principal and interest (if any) in respect of Capital Notes represented by any Bearer Global Note will (subject as provided below) be made in the manner specified above in relation to Definitive Bearer Notes and otherwise in the manner
specified in the relevant Bearer Global Note against presentation or surrender, as the case may be, of such Bearer Global Note at
the specified office of any Paying Agent outside the U.S.. A record of each payment made against presentation or surrender of
such Bearer Global Note, distinguishing between any payment of principal and any payment of interest, will be made on such
Bearer Global Note by such Paying Agent and such record shall be prima facie evidence that the payment in question has been
made.
The holder of a Bearer Global Note shall be the only person entitled to receive payments in respect of Capital Notes represented
by such Bearer Global Note and the Issuer will be discharged by payment to, or to the order of, the holder of such Bearer Global
Note in respect of each amount so paid.
Notwithstanding the foregoing, if any amount of principal and/or interest in respect of this Bearer Global Note is payable in U.S.
dollars, such U.S. dollar payments of principal and/or interest in respect of this Bearer Global Note will be made at the specified
office of a Paying Agent in the U.S. if:
(i) the Issuer has appointed Paying Agents with specified offices outside the U.S. with the reasonable expectation that such
Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the U.S. of the full amount of
principal and interest on the Capital Notes in the manner provided above when due;
(ii) payment of the full amount of such principal and interest at all such specified offices outside the U.S. is illegal or effectively
precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S.
dollars; and
(iii) such payment is then permitted under U.S. law without involving, in the opinion of the Issuer, adverse tax consequences to
the Issuer.
Payments of principal in respect of Registered Notes (whether in individual or global form) will be made in the manner provided
in Condition 5(a) above against presentation and surrender (or, in the case of part payment of any sum due only, endorsement) of
such Registered Global Note or Individual Registered Notes at the specified office of the Registrar or at the specified office of any
Paying Agent. Payments of interest due on a Registered Note will be made to the person in whose name such Capital Note is
registered (i) where in global form, at the close of business on the Clearing System Business Day immediately prior to the date for
payment, where Clearing System Business Days means Monday to Friday inclusive except 25 December and 1 January, and (ii)
where in individual form, at the close of business on the 15th day (whether or not such 15th day is a business day (being for the
purpose a day on which banks are open for business in the city where the specified office of the Registrar is located) (the “Record Date”)). In the case of payments by cheque, cheques will be mailed to the holder (or the first named of joint holders) at such
holder’s registered address on the due date. If payment is required by credit or transfer as referred to in Condition 5(a) above,
application for such payment must be made by the holder to the Registrar not later than the relevant Record Date.
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(c) Payment Day
If the date for payment of any amount in respect of any Capital Note or Coupon is not a Payment Day, the holder thereof shall not
be entitled to payment of the amount due until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, and unless otherwise specified in the applicable
Final Terms, “Payment Day” means any day which is:
(i) a day on which commercial banks and foreign exchange markets settle payments and are open for general business
(including dealing in foreign exchange and foreign currency deposits) in any Payment Business Centre specified in the
applicable Final Terms and, in the case of Notes in individual form only, in the relevant place of presentation; and
(ii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and
foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and
foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (if other than the
place of presentation, any Additional Business Centre) or (2) in relation to Capital Notes denominated or payable in euro, a day on which the TARGET system is operating.
(d) Interpretation of Principal and Interest
Any reference in these Terms and Conditions to principal in respect of the Capital Notes shall be deemed to include, as applicable:
(i) any additional amounts which may be payable with respect to principal under Condition 7 or pursuant to any undertaking
given in addition thereto or in substitution therefor pursuant to the Trust Deed;
(ii) the Early Redemption Amount (as specified in the applicable Final Terms) of the Capital Notes;
(iii) the Optional Redemption Amount(s) (as specified in the applicable Final Terms) (if any) of the Capital Notes; and
(iv) any premium and any other amounts which may be payable by the Issuer under or in respect of the Capital Notes.
Any reference in these Terms and Conditions to interest in respect of the Capital Notes shall be deemed to include, as applicable,
any additional amounts which may be payable with respect to interest under Condition 7 or pursuant to any undertakings given in
addition thereto or in substitution therefor pursuant to the Trust Deed.
(e) Payments on Listed Swiss Franc Capital Notes
The receipt by the Principal Paying Agent named in the applicable Final Terms (the “Principal Paying Agent”) from the Issuer
of each payment in full of principal and/or interest then due in respect of any Listed Swiss Franc Capital Notes at the time and in the manner specified in the agency agreement appointing the Principal Paying Agent to act as such in relation to the Listed Swiss
Franc Capital Notes shall (except to the extent that such payment is avoided or set aside for any reason) satisfy the obligation of
the Issuer under such Capital Notes to make such payment on such date and shall (except as aforesaid) release it from all further
obligations in respect of such payment.
(f) Definition
In this Condition, “euro” means the single currency adopted by those states participating in European Monetary Union from time
to time.
6. Redemption and Purchase
(a) At Maturity Each Capital Note which is specified in the applicable Final Terms as being a Dated Capital Note (“Dated Capital Notes”),
unless previously redeemed or purchased and cancelled as specified below, will be redeemed by the Issuer at its Final Redemption
Amount specified in the applicable Final Terms together, if applicable, with interest accrued to the date fixed for redemption and,
in the case of Capital Notes which are specified in the applicable Final Terms as being Cumulative, any applicable Deferred
Interest on the Maturity Date provided that, in the case of Dated Capital Notes if so specified in the applicable Final Terms, if a
Solvency Event has occurred and is continuing on the Maturity Date or would occur as a result of the relevant redemption, the
Dated Capital Notes shall not be redeemed, unless the prior written approval of FINMA or any Successor Authority for such
payment has been given. In such circumstances, if a Solvency Event has occurred and is continuing on the Maturity Date and no
prior written approval as aforesaid has been given, each such Dated Capital Note will be redeemed by the Issuer promptly
following either the obtaining of such written approval or no Solvency Event continuing (including following the relevant
redemption) and the giving of not more than 30 nor less than 15 days’ notice to such effect by the Issuer to Noteholders in accordance with Condition 13. References herein to “Maturity Date” shall be construed accordingly to refer to such later date of
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redemption and for the avoidance of doubt, interest shall continue to accrue (without compounding) as provided in Condition 4 on
any such Dated Capital Note until such later date of redemption.
A certificate as to the occurrence of a Solvency Event and as to whether or not written approval of FINMA or any Successor Authority as aforesaid has been given signed by two Authorised Officers of the Issuer or ZIG, shall, in the absence of manifest
error be treated and accepted by the Issuer, the Noteholders, the Trustee, the Couponholders and all other interested parties as
correct and sufficient evidence thereof. The Trustee shall be entitled to rely upon such certification absolutely without liability to
any persons.
Each Capital Note which is specified in the applicable Final Terms as an Undated Capital Note (“Undated Capital Notes”) is
perpetual and has no fixed maturity date and is only redeemable or repayable in accordance with the following provisions of this
Condition 6 or Condition 9.
(b) Redemption for Tax Reasons The Capital Notes may, subject to Condition 6(h), be redeemed at the option of the Issuer prior to the first Optional
Redemption Date in whole, but not in part, at any time (if this Capital Note is not a Floating Rate Capital Note) or on any Interest
Payment Date (if this Capital Note is a Floating Rate Capital Note) at the relevant Regular Redemption Price or, as appropriate,
Special Redemption Price referred to below, together, if applicable, with interest accrued to the date fixed for redemption and, in
the case of Capital Notes which are specified in the applicable Final Terms as being Cumulative, any applicable Deferred Interest,
on giving not less than 30 nor more than 60 days’ notice to the Trustee and the Agent and, in accordance with Condition 13, the
Noteholders (which notice shall be irrevocable), if the Issuer satisfies the Trustee immediately before the giving of such notice
that:
(i) on the occasion of the next payment due under the Capital Notes, the Issuer has or will become obliged to pay additional
amounts as provided or referred to in Condition 7 as a result of (a) any law or regulation in existence on the Issue Date (in
which case the Special Redemption Price specified in the applicable Final Terms shall apply) or (b) change in, or amendment to, the laws or regulations of the Relevant Jurisdiction (as defined below) or any political subdivision or any authority
thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations,
which change or amendment becomes effective on or after the Issue Date of the first Tranche of the Capital Notes (a “Tax Law Change”) (in which case the Regular Redemption Price specified in the applicable Final Terms shall apply); and in the
case of both (a) and (b) such obligation cannot be avoided by the Issuer taking such reasonable measures available to it as it
(acting in good faith) deems appropriate, provided that no such notice of redemption shall be given earlier than 90 days prior
to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the
Capital Notes then due;
(ii) on the occasion of the next payment of interest due under the Capital Notes, the Issuer would not be able to obtain a tax
deduction for the purposes of Swiss corporation tax for that payment as a result of (a) any law or regulation in existence on the Issue Date (in which case the Special Redemption Price specified in the applicable Final Terms shall apply) or (b) a Tax
Law Change (in which case the Regular Redemption Price specified in the applicable Final Terms shall apply) and in the
case of both (a) and (b) such cannot be avoided by the Issuer taking such reasonable measures available to it as it (acting in
good faith) deems appropriate; or
(iii) on the occurrence of a Recalculation of Interest which (a) arises as a result of a Tax Law Change, in which case the Regular
Redemption Price specified in the applicable Final Terms shall apply or (b) arises otherwise than as a result of a Tax Law
Change, in which case the Special Redemption Price specified in the applicable Final Terms shall apply; and in the case of
both (a) and (b) such Recalculation of Interest cannot be avoided by the Issuer taking such reasonable measures available to
it as it (acting in good faith) deems appropriate, provided that no such notice of redemption shall be given earlier than
90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in
respect of the Capital Notes then due.
The Trustee is under no obligation to ascertain whether any of the events described in this Condition or any event which could
lead to the occurrence of, or could constitute any such event, has occurred and, until it shall have actual knowledge or notice
pursuant to the Trust Deed to the contrary, the Trustee may assume that no such event has occurred. Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee a certificate signed by two Authorised Officers of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to such effect and the Trustee shall be entitled to accept the certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event they shall be conclusive and binding on the Noteholders and the Couponholders. In these Conditions, “Relevant Jurisdiction” means Switzerland.
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(c) Redemption for Other Reasons The Capital Notes may, subject to Condition 6(h), be redeemed at the option of the Issuer prior to the first Optional Redemption Date in whole, but not in part, at any time (if this Capital Note is not a Floating Rate Capital Note) or on any Interest Payment Date (if this Capital Note is a Floating Rate Capital Note) (provided that the Issuer shall not have the right to redeem the Capital Notes following an Accounting Event or a Capital Event (each as defined below) if such right of redemption would cause a Regulatory Event) at the Regular Redemption Price or the Special Redemption Price, as specified in the applicable Final Terms, together, if applicable, with interest accrued to the date fixed for redemption and, in the case of Capital Notes which are specified in the applicable Final Terms as being Cumulative, any applicable Deferred Interest on giving not less than 30 nor more than 60 days’ notice to the Trustee, the Agent and, in accordance with Condition 13, the Noteholders (which shall be irrevocable), if the Issuer satisfies the Trustee immediately before the giving of such notice that: (i) if so specified in the applicable Final Terms, an Accounting Event has occurred and is continuing; or (ii) if so specified in the applicable Final Terms, a Capital Event has occurred and is continuing; or (iii) if so specified in the applicable Final Terms, a Regulatory Event has occurred and is continuing. As used herein: “Accounting Event” means that an opinion of a recognised accounting firm has been delivered to the Issuer, stating that obligations of the Issuer in respect of the Capital Notes must not or must no longer be recorded under the Initial Accounting Treatment Methodology specified in the applicable Final Terms (either “liabilities” or “equity”), (being the presentation of the Capital Notes under IFRS as at the Issue Date) on the balance sheet of ZIG published in its annual consolidated financial statements pursuant to IFRS and this cannot be avoided by the Issuer or, as the case may be, ZIG taking such reasonable measures as the Issuer or ZIG (acting in good faith) deems appropriate. The Issuer will deliver the applicable opinion to the Trustee. “Capital Event” means a change by a nationally recognised statistical rating organisation to its equity credit criteria, or the interpretation or application thereof, for securities such as the Capital Notes, as such criteria are in effect on the Issue Date (the “current criteria”), which change has been confirmed in writing to the Issuer by such organisation and results in a lower equity credit being given to the Capital Notes as of the date of such change by such nationally recognised statistical rating organisation pursuant to its current criteria and the Issuer shall deliver such written notification of such nationally recognised statistical rating organisation to the Trustee. “Future Regulations” means the solvency margin, regulatory capital or capital regulations (if any) which may be introduced in Switzerland (or if ZIC becomes domiciled for regulatory purposes in a jurisdiction other than Switzerland, such other jurisdiction) and which are applicable to ZIC, which would set out the requirements to be fulfilled by financial instruments in order to be eligible to be included in Tier Two (or equivalent) own funds regulatory capital. “Regulatory Event” means, in respect of Undated Capital Notes, the occurrence of any of the following events which occurrence cannot be avoided by the Issuer taking such reasonable measures as the Issuer (acting in good faith) deems appropriate: (A) prior to the implementation of the Future Regulations, FINMA or any Successor Authority states that the Capital Notes are
no longer eligible to qualify as at least upper additional capital (“oberes ergänzendes Kapital”) pursuant to Art. 49 in connection with Art. 39 of the SPICO (as defined below), and no longer fulfil the requirements for such category, or equivalent thereof, for group or solo solvency purposes; or
(B) with effect from the implementation of the Future Regulations, the Capital Notes do not qualify, or initially qualify but cease
to so qualify, as at least Tier Two own funds (or equivalent) under such Future Regulations (or an official application or interpretation of those regulations including a decision of a court or tribunal); or
(C) FINMA or any Successor Authority issues guidance after the Issue Date in relation to Tier 1 Capital (“Kernkapital”)
qualifying instruments for group or solo solvency purposes (by way of law, ordinance, regulation or interpretation thereof), and FINMA or any Successor Authority affords the Capital Notes recognition as Tier 1 Capital (“Kernkapital”) for group or solo solvency purposes, and at a subsequent time FINMA or any Successor Authority states that the Capital Notes no longer fulfil the requirements of Tier 1 Capital (“Kernkapital”),
save, in each case above, where such non-qualification thereof applicable to the Capital Notes is only as a result of any applicable limitation on the amount of such capital. “Regulatory Event” means, in respect of Dated Capital Notes, the occurrence of any of the following events which occurrence cannot be avoided by the Issuer taking such reasonable measures as the Issuer (acting in good faith) deems appropriate: (A) prior to the implementation of the Future Regulations, FINMA or any Successor Authority states that the Capital Notes
are no longer eligible to qualify as at least lower additional capital pursuant to Art. 49 in connection with Art. 39 of the SPICO (as defined below), and no longer fulfil the requirements for such category, or equivalent thereof, for group or solo solvency purposes; or
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(B) with effect from the implementation of the Future Regulations, the Capital Notes do not qualify, or initially qualify but cease to so qualify, as at least Tier Two own funds (or equivalent) under such Future Regulations (or an official application or interpretation of those regulations including a decision of a court or tribunal); or
(C) FINMA or any Successor Authority issues guidance after the Issue Date in relation to Tier 1 Capital (“Kernkapital”)
qualifying instruments for group or solo solvency purposes (by way of law, ordinance, regulation or interpretation thereof), and FINMA or any Successor Authority affords the Capital Notes recognition as Tier 1 Capital (“Kernkapital”) for group or solo solvency purposes, and at a subsequent time FINMA or any Successor Authority states that the Capital Notes no longer fulfil the requirements of Tier 1 Capital (“Kernkapital”),
save, in each case above, where such non-qualification thereof applicable to the Capital Notes is only as a result of any applicable limitation on the amount of such capital. “SPICO” means the Ordinance on the Supervision of Private Insurance Companies (Verordnung über die Beaufsichtigung von privaten Versicherungsunternehmen — AVO) of 9 November 2005, as amended. “Special Event” means any of an Accounting Event, a Capital Event or a Regulatory Event or any combination of the foregoing; “Tier 1 Capital” means core capital (“Kernkapital”) pursuant to Art. 48 SPICO. Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee a certificate signed by two Authorised Officers of the Issuer stating that the circumstances described in the definitions of Accounting Event, Capital Event or Regulatory Event (as appropriate) have occurred and that, where such Special Event requires reasonable measures as the Issuer or, as the case may be, ZIG may deem appropriate to be taken, the relevant Special Event cannot be avoided by the Issuer or, as the case may be, ZIG taking such measures and the Trustee shall be entitled to accept such certificate as sufficient evidence that the circumstances described in the relevant Special Event apply, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. The Trustee is under no obligation to ascertain whether any Special Event or any event which could lead to the occurrence of, or could constitute, any such Special Event, has occurred and, until it shall have actual knowledge or notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no such Special Event has occurred.
(d) Redemption at the Option of the Issuer Subject to Condition 6(h), the Issuer may, having given: (i) not less than 15 nor more than 30 days’ notice to the Noteholders in accordance with Condition 13; and (ii) not less than 15 days before the giving of the notice referred to in (i), written notice to the Trustee and the Agent, (which notices shall be irrevocable), redeem all or some only of the Capital Notes then outstanding on any Optional Redemption Date and at the Optional Redemption Amount(s) specified in the applicable Final Terms together, if appropriate, with interest accrued to (but excluding) the relevant Optional Redemption Date and, in the case of Capital Notes which are specified in the applicable Final Terms as being Cumulative, any applicable Deferred Interest. Any such redemption must be of a nominal amount not less than the Minimum Redemption Amount or not more than the Maximum Redemption Amount, in each case as may be specified in the applicable Final Terms. In the case of a partial redemption of Capital Notes, the Capital Notes to be redeemed (“Redeemed Notes”) will be selected individually by lot in a manner approved by the Trustee, in the case of Redeemed Notes represented by Definitive Notes, and in accordance with the rules of Euroclear and/or Clearstream, Luxembourg, in the case of Redeemed Notes represented by a Global Note, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”). In the case of Redeemed Notes represented by Definitive Bearer Notes or Individual Registered Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 13 not less than 15 days prior to the date fixed for redemption. The aggregate nominal amount of Redeemed Notes represented by Definitive Bearer Notes or Individual Registered Notes shall bear the same proportion to the aggregate nominal amount of all Redeemed Notes as the aggregate nominal amount of Definitive Bearer Notes or Individual Registered Notes outstanding bears to the aggregate nominal amount of the Capital Notes outstanding, in each case on the Selection Date, provided that such first mentioned nominal amount shall, if necessary, be rounded downwards to the nearest integral multiple of the Specified Denomination, and the aggregate nominal amount of Redeemed Notes represented by a Global Note shall be equal to the balance of the Redeemed Notes. No exchange of the relevant Global Note will be permitted during the period from and including the Selection Date to and including the date fixed for redemption pursuant to this Condition 6(d) and notice to that effect shall be given by the relevant Issuer to the Noteholders in accordance with Condition 13 at least five days prior to the Selection Date.
(e) Substitution or Variation If any of the events described in Condition 6(b) or 6(c) has occurred and is continuing, then the Issuer may, subject to Condition 6(h), (without any requirement for the consent or approval of the Noteholders) and subject to having satisfied the Trustee immediately prior to the giving of such notice referred to herein that the provisions of this Condition 6(e) have been complied with and having given not less than seven days’ written notice to the Trustee, the Agent and, in accordance with Condition 13, the Noteholders (which notice shall be irrevocable), at any time either substitute all (but not some only) of the Capital Notes for, or
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vary the terms of the Capital Notes so that they remain or, as appropriate, become, Qualifying Securities and the Trustee shall (subject as provided below and to the following provision of this Condition 6(e) being complied with and subject further to the receipt by the Trustee of a certification by the Authorised Officers of the Issuer referred to below) agree to such substitution or variation. In connection therewith, in the case of Capital Notes which are specified in the applicable Final Terms as being Cumulative, all applicable Deferred Interest (if any) will be satisfied by operation of the APM or otherwise, as applicable. Upon the expiry of such notice, the Issuer shall either vary the terms of, or substitute, the Capital Notes in accordance with this Condition 6(e), as the case may be. The Trustee shall not be obliged to participate in any substitution or variation of the Capital Notes for any proposed alternative Qualifying Securities if the terms of the proposed alternative Qualifying Securities would impose, in the Trustee’s opinion, more onerous obligations on it.
As used herein, “Qualifying Securities” means securities:
(a) having terms (including terms providing for deferral and/or cancellation of payment of interest and/or principal) that are not
materially less favourable to an investor than the terms of the Capital Notes (as reasonably determined by the Issuer after
consulting an independent investment bank of international standing, and provided that a certification to such effect of two Authorised Officers of the Issuer shall have been delivered to the Trustee prior to the issue of the relevant securities); and
(b) issued by the Issuer or issued by another member of the Zurich Insurance Group with a guarantee by the Issuer, such that
investors have the same material rights and claims as provided by the Capital Notes (as reasonably determined by the Issuer,
and provided that a certification to such effect of two Authorised Officers shall have been delivered to the Trustee prior to
the issue of the relevant securities); and
(c) ranking at least equal to the Capital Notes and featuring the same principal amount, interest rate (including applicable
margins and step-up), Interest Payment Dates and Optional Redemption Dates as the Capital Notes; and
(d) containing terms which preserve the obligations (including the obligations arising from the exercise of any right) of the Issuer as to redemption of the Notes, including (without limitation) as to timing of and amounts payable on, such
redemption; and
(e) which do not contain any terms providing for loss absorption through principal write-down or conversion to ordinary shares,
unless the triggers are objective and measurable; and
(f) listed on an internationally recognised stock exchange, if the Capital Notes were listed prior to such substitution or variation.
In addition, any substitution or modification is subject to (A) all interest amounts, including Deferred Interest, and any other
amount payable under the Capital Notes which, in each case, has accrued to Noteholders and has not been paid, being satisfied in
full on or prior to the date hereof; (B) compliance with Condition 6(h); (C) the substitution or variation not itself giving rise to a
change in any published rating of the Capital Notes in effect at such time as confirmed in writing by the rating organisations who have given such published rating of the Capital Notes previously; (D) the substitution or variation not triggering the right on the
part of the Issuer to redeem the Capital Notes pursuant to Condition 6(b) or 6(c); and (E) certification by two Authorised Officers
of the Issuer that the securities in question are “Qualifying Securities” in accordance with the definition set out above and that
the conditions set out herein have been complied with, which such certificate shall be delivered to the Trustee prior to the
substitution or variation of the relevant securities and upon which certificate the Trustee shall be entitled to rely absolutely without
liability to any person.
In connection with any substitution or variation as indicated above, the Issuer will comply with the rules of any stock exchange or
other relevant authority on which the Capital Notes are then listed or admitted to trading.
(f) Purchases
The Issuer or any of its Subsidiaries (as such term is defined in the Trust Deed) may, subject to Condition 6(h) and, in the case of
Restricted Capital Notes subject to Condition 10(j), at any time purchase Capital Notes (provided that, in the case of Definitive
Bearer Notes, all unmatured Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or
otherwise. Such Capital Notes may be held, resold or, at the option of the Issuer, surrendered to any Paying Agent or the Registrar
for cancellation.
(g) Cancellation
All Capital Notes which are redeemed or purchased and surrendered for cancellation will forthwith be cancelled (together, in the
case of Definitive Bearer Notes, with all unmatured Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Capital Notes so cancelled (together in the case of Definitive Bearer Notes with all unmatured Coupons and
Talons cancelled therewith) shall be forwarded to the Agent and cannot be reissued or resold.
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(h) Conditions to Redemption, Substitution, Variation and Purchase
The Issuer may only redeem a Capital Note, or substitute or vary it in accordance with Condition 6(e) (and the persons referred to
in Condition 6(f) may only purchase a Capital Note) if FINMA or any Successor Authority has given (and has not subsequently withdrawn) its consent to the redemption (or substitution or variation or purchase as appropriate) to the extent such consent is
required or otherwise has not objected to such redemption (or substitution or variation or purchase).
7. Taxation
(a) Additional Amounts
All payments of principal, premium and interest in respect of the Capital Notes will be made free and clear of, and without
any Tax Deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed by Switzerland
or any subdivision thereof (“Taxes”) or required pursuant to an agreement described in section 1471(b) of the U.S. Internal
Revenue Code of 1986 (the “Code”), unless the Issuer is compelled by law and/or by agreement of the Issuer to make such Tax Deduction. In the event of such Tax Deduction, the Issuer will pay such additional amounts (the “Additional Amounts”) as will result (after such Tax Deduction) in receipt by the Noteholders of such sums as the Noteholders would
have received if no Tax Deduction had been required.
(b) Exceptions
However, no such Additional Amounts or interest recalculated pursuant to Condition 4(d) shall be payable with respect to
such Taxes in respect of any Noteholder:
(i) if Capital Notes other than Restricted Capital Notes are issued;
(ii) if the Capital Note is presented for payment by or on behalf of a Noteholder which is liable to such taxes, duties, assessments or governmental charges in respect of that Capital Note by reason of it having some connection with the
Relevant Jurisdiction other than the mere holding of that Capital Note;
(iii) if the Capital Note is presented for payment more than 30 days after the Relevant Date (as defined below), except to the
extent that the relevant holder would have been entitled to payment of such Additional Amounts or recalculated interest
if it had presented its Capital Note for payment on the 30th day after the Relevant Date, on the assumption if such is not
the case, that such last day is a Business Day;
(iv) where such Tax Deduction is imposed on a payment to an individual or a residual entity and (y) is required to be made
pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in
order to conform to, such Directive or (z) is required to be made pursuant to any agreements between the European Community and other countries or territories providing for measures equivalent to those laid down in the European
Council Directive 2003/48/EC, including, but not limited to, the agreement between the European Community and the
Confederation of Switzerland dated as of 26 October 2004, or any law or other governmental regulation implementing
or complying with, or introduced in order to conform to, such agreements;
(v) in respect of any U.S. federal withholding tax that is imposed, assessed, levied or collected by reason of Section 1471
through 1474 of the Code (or any regulations promulgated thereunder or administrative interpretations thereof or
agreement with any Relevant Jurisdiction or the U.S. relating thereto);
(vi) where such withholding or deduction is imposed on a payment and is required to be made pursuant to laws enacted by
Switzerland providing for the taxation of payments according to principles similar to those laid down in the draft
legislation proposed by the Swiss Federal Council on 24 August 2011, in particular the principle to have a person other than the Issuer withhold or deduct the tax, including, without limitation, any paying agent;
(vii) where such withholding or deduction is required to be made pursuant to any agreements between Switzerland and other
countries on final withholding taxes (internationale Quellensteuern) levied by a paying agent in respect of an
individual resident in the other country on interest or capital gain paid, or credited to an account, relating to a Capital
Note; or
(viii) if the Capital Note is presented for payment by or on behalf of a Noteholder which would have been able to avoid such
Tax Deduction by presenting the Capital Note to a Paying Agent in another Member State of the European Union;
(ix) (if so specified in the applicable Final Terms) if the payment could have been made to the relevant Noteholder without a Tax Deduction if it were a Qualifying Lender (as defined below), but on that date that Noteholder is not or has ceased
to be a Qualifying Lender other than as a result of any change after the date it became a Noteholder under these
Conditions in (or in the interpretation, administration, or application of) any law or double taxation treaty, or any
published practice or concession of any relevant taxing authority; or
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(x) if the payment could have been made without a Tax Deduction if the Noteholders had complied with Conditions 10(j)
and 10(k) (if Condition 10(j) is expressed in the applicable Final Terms to apply).
(c) Evidence
Within 30 days of making either a Tax Deduction or a payment required in connection with a Tax Deduction, the Issuer shall
deliver to the relevant Noteholder evidence satisfactory to that Noteholder (acting reasonably) that the Tax Deduction has
been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority.
(d) Refund
If the Issuer is required to make a Tax Deduction and the relevant Noteholder (acting in good faith) determines that (i) a Tax
refund for such Tax Deduction is available to it and it has retained that Tax refund, that Noteholder shall pay within 10
Business Days after such Tax refund an amount to the Issuer which that Noteholder determines (in its sole discretion) will leave it (after that payment) in the same after-tax position as it would have been if the payment of the Additional Amount
had not been required to be made by the Issuer.
(e) Definitions
As used in the Conditions:
“Guidelines” means, together, the guideline “Interbank Loans” of 22 September 1986 (S-02.123) (Merkblatt “Verrechnungssteuer auf Zinsen von Bankguthaben, deren Gläubiger Banken sind (Interbankguthaben)” vom 22. September 1986); the guideline “Bonds” of April 1999 (S 02.122.1) (Merkblatt “Obligationen” vom April 1999); the guideline “Syndicated
Loans” of January 2000 (S-02.128) (Merkblatt “Steuerliche Behandlung von Konsortialdarlehen, Schuldscheindarlehen, Wechseln und Unterbeteiligungen” vom Januar 2000); the circular letter No. 15 (1-015-DVS-2007) of 7 February 2007 in relation to bonds and derivative financial instruments as subject matter of Swiss federal income tax, Swiss federal withholding tax and
Swiss federal stamp taxes (Kreisschreiben Nr. 15 “Obligationen und derivative Finanzinstrumente als Gegenstand der direkten Bundessteuer, der Verrechnungssteuer und der Stempelabgaben” vom 7. Februar 2007) and the circular letter “Deposits” of 26
July 2011 (1-034-V-2011) (Kreisschreiben Kundenguthaben vom 26. Juli 2011), each as issued, and as amended from time to
time, by the Swiss federal tax authorities.
“Non-Bank Rules” means the Ten Non-Bank Rule and the Twenty Non-Bank Rule (each as defined below).
“Permitted Non-Qualifying Lender” means in respect of a Series of Restricted Capital Notes a person or entity which is not a
Qualifying Bank on the date it becomes a Noteholder and:
(i) is initially a Permitted Non-Qualifying Lender (if any) specified in the applicable Final Terms (for so long as that Permitted
Non-Qualifying Lender continues to be a Noteholder in accordance with the Conditions), or
(ii) is a successor of an initial Permitted Non-Qualifying Lender, or any subsequent successor thereof, by way of Transfer (as
defined in Condition 10(j)) of all but not some only of the Capital Notes held by such initial Permitted Non-Qualifying
Lender, or such subsequent successor thereof (for so long as that successor continues to be a Noteholder in accordance with
the Conditions), which:
(A) has prior to its becoming a Noteholder, satisfied all obligations to be fulfilled by a proposed Permitted Non-Qualifying
Lender in accordance with Condition 10(j), provided that:
(a) within ten (10) Business Days of notification to it by the existing Permitted Non-Qualifying Lender of the identity of such proposed Permitted Non-Qualifying Lender, the Issuer may, as a condition precedent to such proposed Permitted Non-
Qualifying Lender becoming a Noteholder:
(i) request from that proposed Permitted Non-Qualifying Lender a confirmation that it has disclosed to the Issuer all facts
relevant to the determination as to whether it would be a Permitted Non-Qualifying Lender and would constitute one
(1) person only for purposes of the Non-Bank Rules; and
(ii) irrespective of whether a request is made in accordance with paragraph (A)(a)(i) above, request from that proposed
Permitted Non-Qualifying Lender a tax ruling of the Swiss Federal Tax Administration (at the cost of the existing
Permitted Non-Qualifying Lender or the proposed Permitted Non-Qualifying Lender), confirming to the Issuer’s
satisfaction that such proposed Permitted Non-Qualifying Lender does constitute one (1) person only for purposes of the Non-Bank Rules; and
(b) the Issuer, acting reasonably, shall confirm within ten (10) Business Days of notification of all facts (if a request in
accordance with paragraph (A)(a)(i) above has been made) or receipt of a tax ruling (if a request in accordance with
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paragraph (A)(a)(ii) above has been made) whether or not such disclosure, or such tax ruling, as the case may be, is
satisfactory and, in the absence of such confirmation, the Issuer shall be deemed to have confirmed such disclosure, or such
tax ruling, as the case may be, is so satisfactory on the tenth (10th) Business Day after receipt hereof or thereof; and
(B) has, simultaneously with becoming a Noteholder, succeeded the existing Permitted Non-Qualifying Lender as “Permitted
Non-Qualifying Lender” under all, but not some only, Restricted Capital Notes of the respective Series and under any and all
other existing or future Series of Restricted Capital Notes, or similar instruments, between the Issuer and the existing
Permitted Non-Qualifying Lender (or any successor thereof).
“Permitted Non-Qualifying Lenders” means in respect of a Series of Restricted Capital Notes the number of Permitted Non-
Qualifying Lenders specified in the applicable Final Terms.
“Qualifying Bank” means a person or entity which (a) effectively conducts banking activities with its own infrastructure and
staff as its principal business purpose and which has a banking licence in full force and effect issued in accordance with the
banking laws in force in its jurisdiction of incorporation, or if acting through a branch, issued in accordance with the banking laws in the jurisdiction of such branch and (b) is organised under the laws of a country which is a member of the Organisation for
Economic Co-operation and Development (OECD).
“Qualifying Lender” means a Noteholder which is a Qualifying Bank or a Permitted Non-Qualifying Lender.
“Relevant Date” means whichever is the later of the date on which the payment in question first becomes due and, if the full
amount payable has not been received by the Agent on or prior to that due date, the date on which notice of receipt of the full
amount has been given to the Noteholders in accordance with Condition 13.
“Restricted Capital Notes” means Capital Notes issued in accordance with Conditions 10(j) and 10(k).
“Tax Deduction” has the meaning set out in Condition 4(d).
“Ten Non-Bank Rule” means the rule that the aggregate number of Noteholders under a Series of Restricted Capital Notes which
are not Qualifying Banks must not at any time exceed ten, in each case in accordance with the meaning of the Guidelines.
“Twenty Non-Bank Rule” means the rule that the aggregate number of the Issuer’s lenders (including Noteholders), other than
Qualifying Banks, under all outstanding debts relevant for classification as debenture (Kassenobligation), such as intra-Group
loans, facilities and/or private placements (including under Restricted Capital Notes and Capital Notes not classified as a taxable
bond (Anleihensobligation)) must not at any time exceed twenty, in each case in accordance with the meaning of the Guidelines.
Under existing law, ZIC is obliged to withhold the Swiss federal withholding tax on any payment of interest in respect of a Capital Note at the current rate of 35 per cent. On 24 August 2011 the Swiss Federal Council issued draft legislation, which, if enacted, would remove such obligation entirely. Instead, the obligation would be imposed on any paying agent in Switzerland (as defined in the proposed new law) but only if the payment of interest in respect of a Capital Note were made to an individual resident in Switzerland or to any person (not only individual) resident outside Switzerland. In all other cases no withholding obligation would arise under the proposed new law. 8. Prescription
The Capital Notes and Coupons will become void unless presented for payment within a period of 10 years (in the case of
principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 7) therefor.
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of
which would be void pursuant to this Condition or Condition 5(b) or any Talon which would be void pursuant to Condition 5(b).
9. Dissolution Event
(a) Dissolution Event
The Trustee at its discretion may, and if so requested in writing by the holders of not less than 25 per cent in nominal amount of
the Capital Notes then outstanding or if so directed by an Extraordinary Resolution (as defined in the Trust Deed) of the
Noteholders shall (but, in each case, subject to the Trustee having been indemnified and/or secured to its satisfaction), give notice
to the Issuer that the Capital Notes are immediately due and repayable at an amount equal to the principal amount of such Capital
Note together with accrued interest and, in the case of Capital Notes which are specified in the applicable Final Terms as being
Cumulative, any applicable Deferred Interest if the following event (“Dissolution Event”) shall have occurred: a resolution is passed or an order of a court of competent jurisdiction is made that the Issuer be wound up or dissolved otherwise than for the
purpose of or pursuant to and followed by a consolidation, amalgamation, merger or reconstruction the terms of which shall have
previously been approved in writing by the Trustee or by an Extraordinary Resolution of Noteholders or as a result of a Permitted
Reorganisation (a “Dissolution Event”).
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(b) Proceedings for Winding-up
If the Capital Notes become due and repayable (whether pursuant to Condition 9(a), Condition 6 or otherwise) and are not paid when so due and repayable, the Trustee may at its discretion participate in, but not itself institute, proceedings for the winding-up
of the Issuer and may take no further action to enforce the obligations of the Issuer for payment of any principal or interest
(including, in the case of Capital Notes which are specified in the applicable Final Terms as being Cumulative, applicable
Deferred Interest, if any) in respect of the Capital Notes.
No payment in respect of the Capital Notes may be made by the Issuer pursuant to Condition 9(a), nor will the Trustee accept the
same, otherwise than during or after a winding-up of the Issuer.
(c) Enforcement
Without prejudice to Condition 9(a) or 9(b) above and, in the case of Restricted Capital Notes, subject to Conditions 10(j) and 10(k), the Trustee may at its discretion and without further notice institute such proceedings against the Issuer as it may think fit to
enforce any obligation, condition or provision binding on the Issuer under the Trust Deed, the Capital Notes or the Coupons (other
than any obligation for the payment of any principal or interest in respect of the Capital Notes or the Coupons) provided that the
Issuer shall not by virtue of the institution of any such proceedings be obliged to pay any sum or sums sooner than the same would
otherwise have been payable by it.
(d) Rights of Noteholders
No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer or to prove in the winding-up of the Issuer
unless the Trustee, having become so bound to proceed or being able to prove in such winding-up, fails to do so within a
reasonable period and such failure shall be continuing, in which case the Noteholders or Couponholders shall have only such
rights against the Issuer as those which the Trustee is entitled to exercise.
(e) Extent of Noteholders’ Remedy
No remedy against the Issuer other than as referred to in this Condition 9, shall be available to the Trustee or the Noteholders or
Couponholders, whether for the recovery of amounts owing in respect of the Capital Notes or under the Trust Deed or in respect
of any breach by the Issuer of any of its other obligations under or in respect of the Capital Notes or under the Trust Deed.
In this Condition: “Permitted Reorganisation” means an amalgamation, merger, consolidation, reorganisation or other similar
arrangement entered into by the Issuer under which:
(a) the whole or a substantial part of the business, undertaking and assets of the Issuer are transferred to, and all the liabilities and obligations of the Issuer are assumed by, the new or surviving entity either:
(A) automatically by operation of applicable law; or
(B) by means of the new or surviving entity assuming all of the obligations of the Issuer under the terms of the
Trust Deed and the Notes and as fully as if (and to the same extent in terms of ranking in a winding-up) it had
been named in the Trust Deed and the Notes in place of the Issuer, and,
(b) the new or surviving entity will immediately after such amalgamation, merger, consolidation, reorganisation or other
similar arrangement be subject to the same regulation and supervision by the same regulatory authority (if any) as the
Issuer was subject to immediately prior thereto.
10. Exchange of Capital Notes, transfer of Registered Global Notes, interests in Reg. S Notes, Individual Registered Notes and Replacement of Notes, Coupons and Talons
(a) Exchange of Bearer Notes for Registered Notes
If so specified in the applicable Final Terms, a Bearer Note in definitive form may be exchanged for Registered Notes of like
aggregate nominal amount (in individual registered form) by submission of a duly completed request for exchange substantially in
the form provided in the Agency Agreement (an “Exchange Request”), copies of which are available from the specified office of
the Registrar or any Transfer Agent, together with the Definitive Bearer Note and all unmatured Coupons and Talons appertaining
thereto, to a Transfer Agent at its specified office. Within five business days (being for this purpose, a day on which commercial
banks and foreign exchange markets are open for business in the jurisdiction of the relevant Transfer Agent) of the request, in relation to Individual Registered Notes for which the Definitive Bearer Note is to be exchanged, the relevant Transfer Agent will
authenticate and deliver, or procure the authentication and delivery of, at its specified office to the holder or (at the risk of the
holder) send by mail to such address as may be specified by the holder in the Exchange Request, the Individual Registered Note(s)
of a like aggregate nominal amount to the Definitive Bearer Note(s) exchanged and will enter the exchange of the Definitive
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Bearer Note(s) in the Register maintained by the Registrar as of the date which is 40 days after the date on which any Temporary
Global Note is issued (the “Exchange Date”).
Exchange Requests may not be presented on or after the Record Date (as defined in Condition 5(b)) in respect of any Interest Payment Date up to and including such Interest Payment Date. Interest on Individual Registered Notes issued on exchange will
accrue as from the immediately preceding Interest Payment Date, as the case may be. No exchanges of Bearer Notes for
Registered Notes or interests in Registered Global Notes will be permitted for so long as the Bearer Notes are represented by a
Temporary Global Note.
(b) Exchange of interests in Registered Global Notes for Individual Registered Notes
Interests in the Reg. S Global Note will be exchangeable for Individual Registered Notes in the following limited circumstances:
(i) if Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of
holiday, statutory or otherwise) or announces its intention permanently to cease business or does in fact do so and no alternative
clearance system acceptable to the Trustee is available or (ii) the Trustee has instituted or has been directed to institute any judicial proceeding in a court to enforce the rights of Noteholders under the Capital Notes represented by such Registered Global
Note, and the Trustee has been advised by counsel that in connection with such proceedings it is necessary or appropriate for the
Trustee to obtain possession of Individual Registered Notes representing the Registered Global Note. Upon the occurrence of any
of the events described in the preceding sentence, the Issuer will cause the appropriate Individual Registered Notes to be
delivered, provided that notwithstanding the above, no Individual Registered Notes will be issued until expiry of the applicable
Distribution Compliance Period.
(c) Transfers of Registered Global Notes
Transfers of a Registered Global Note shall be limited to transfers of such Registered Global Note, in whole but not in part, to a
nominee of Euroclear or Clearstream, Luxembourg or to a successor of any of them or such successor’s nominee.
(d) Transfers of interests in Reg. S Notes
Prior to expiry of the applicable Distribution Compliance Period, transfers by the holder of, or of an interest in, a Reg. S Note to a
transferee in the U.S. will only be made pursuant to the U.S. Securities Act or an exemption therefrom, subject to receipt by the
Issuer of such satisfactory evidence as the Issuer may reasonably require, which may include an opinion of U.S. counsel, that such
transfer is in compliance with any applicable securities laws of any state of the U.S., and in accordance with any applicable
securities laws of any state of the U.S. or any other jurisdiction.
After expiry of the applicable Distribution Compliance Period such certification requirements will no longer apply to such
transfers.
(e) Exchanges and transfers of Registered Notes generally
Registered Notes may not be exchanged for Bearer Notes.
Transfers of interests in Reg. S Global Notes will be effected by Euroclear or Clearstream, Luxembourg, as the case may be, and,
in turn, by participants and, if appropriate, indirect participants in such clearing systems acting on behalf of transferors and
transferees of such interests. An interest in a Reg. S Global Note will be transferable and exchangeable for Individual Registered
Notes or for an interest in another Reg. S Global Note only in accordance with the rules and operating procedures for the time
being of Euroclear or Clearstream, Luxembourg (the “Applicable Procedures”).
Upon the terms and subject to the conditions set forth in the Agency Agreement, an Individual Registered Note may be transferred
in whole or in part (in the authorised Denominations set out in the applicable Final Terms) by the holder or holders surrendering the Individual Registered Note for registration of the transfer of the Individual Registered Note (or the relevant part of the
Individual Registered Note) at the specified office of the Registrar or any Transfer Agent, with the form of transfer thereon duly
executed by the holder or holders thereof or his or their attorney or attorneys duly authorised in writing and upon the Registrar or,
as the case may be, the relevant Transfer Agent, after due and careful enquiry, being satisfied with the documents of title and the
identity of the person making the request and subject to such reasonable regulations as the Issuer and the Registrar, or as the case
may be, the relevant Transfer Agent may with the prior approval of the Trustee prescribe, including any restrictions imposed by
the Issuer on transfers of Registered Notes in individual form originally sold to a U.S. person. Subject as provided above, the
Registrar or, as the case may be, the relevant Transfer Agent will, within five business days (being for this purpose a day on which
banks are open for business in the city where the specified office of the Registrar or, as the case may be, the relevant Transfer
Agent is located) of the request (or such longer period as may be required to comply with any applicable fiscal or other laws or
regulations) authenticate and deliver, or procure the authentication and delivery of, at its specified office to the transferee or (at the risk of the transferee) send by mail to such address as the transferee may request, a new Individual Registered Note of a like
aggregate nominal amount to the Registered Note (or the relevant part of the Individual Registered Note) transferred. In the case
of the transfer of part only of an Individual Registered Note, a new Individual Registered Note in respect of the balance of the
Registered Note not transferred will be so authenticated and delivered or (at the risk of the transferor) sent to the transferor.
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Exchanges or transfers by a holder of an Individual Registered Note for an interest in, or to a person who takes delivery of such
Individual Registered Note through, a Reg. S Global Note will be made no later than 60 days after the receipt by the Registrar or,
as the case may be, the relevant Transfer Agent of the Individual Registered Note to be so exchanged or transferred and, if applicable, upon receipt by the Registrar of a written certification from the transferor.
(f) Registration of transfer upon partial redemption
In the event of a partial redemption of Capital Notes under Condition 6(d), the Issuer shall not be required:
(i) to register the transfer of Registered Notes (or parts of Registered Notes) during the period beginning on the sixty-fifth day
before the date of the partial redemption and ending on the date on which notice is given specifying the serial numbers of
Capital Notes called (in whole or in part) for redemption (both inclusive); or
(ii) to register the transfer of any Registered Note, or part of a Registered Note, called for partial redemption.
(g) Closed periods
No Noteholder may require the transfer of a Registered Note to be registered during the period of 30 days ending on the due date
for any payment of principal or interest on that Capital Note.
(h) Costs of exchange or registration
The transfer of a Capital Note will be effected without charge by or on behalf of the Issuer, the Registrar or any Transfer Agent
but against such indemnity as the Registrar or (as the case may be) such Transfer Agent may require from the Noteholder in
respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer.
(i) Replacement of Capital Notes, Coupons and Talons
Should any Capital Note, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified
office of the Agent, in the case of a Bearer Note or Coupon, or the Registrar, in the case of an Individual Registered Note, or any
other place approved by the Trustee of which notice shall have been published in accordance with Condition 13, upon payment by
the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and
indemnity as the Issuer may reasonably require. Mutilated or defaced Capital Notes, Coupons or Talons must be surrendered
before replacements will be issued.
(j) Restrictions on Transfer of Certain Capital Notes (i) If the applicable Final Terms designate the Capital Notes as Restricted Capital Notes, (but not otherwise) the provisions of
this Condition 10(j) shall apply and the Restricted Capital Notes will be issued as Registered Notes and may only be
assigned or transferred, including upon an enforcement of a security, (a “Transfer” and “Transferred” shall be construed
accordingly):
(a) in whole or in part, if the Transfer is to a Qualifying Bank, or
(b) in whole, but not in part (except for parts of Restricted Capital Notes held by Qualifying Banks at the time), if the
Transfer is to a Permitted Non-Qualifying Lender,
provided that no Transfer under this Condition 10(j) may result in more Permitted Non-Qualifying Lenders being
Noteholders than as specified in the applicable Final Terms.
The Restricted Capital Notes will bear a legend setting forth the applicable transfer restrictions provided for in this Condition
10(j).
(ii) A Noteholder may at any time require that the Issuer replaces such Noteholder’s certificate(s) representing the Restricted
Capital Notes with certificates in minimum denominations equal to the Restricted Capital Note Minimum Denomination
Amount specified in the applicable Final Terms.
(iii) Restricted Capital Notes may only be Transferred in amounts equal to the Restricted Capital Note Transfer Amount specified
in the applicable Final Terms.
(iv) Any Transfer of a Restricted Capital Note shall be recorded by the Registrar in the Register on production of:
(a) the relevant certificate representing the Restricted Capital Note and certification delivered to the Registrar by the
transferee to the effect that it is a Qualifying Bank or Permitted Non-Qualifying Lender; and
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(b) such other evidence as the Issuer may require.
Any Transfer of a Restricted Capital Note shall only be effective and shall only be recorded by the Registrar in the Register if such Restricted Capital Note is Transferred in accordance with this Condition 10(j).
(v) Subject to this Condition 10(j), no Noteholder shall at any time enter into any arrangement with another person under which
such Noteholder transfers all or part of its interest in the Restricted Capital Notes to that other person, unless under such
arrangement throughout the life of such arrangement:
(a) the relationship between the Noteholder and that other person is that of debtor and creditor (including in the bankruptcy
or similar event of that Noteholder or the Issuer),
(b) the other person will have no proprietary interest in the benefit of the Restricted Capital Notes or in any monies
received by the Noteholder under or in relation to the Restricted Capital Notes held by that Noteholder, and
(c) the other person will under no circumstances (other than by way of permitted Transfer under this Condition 10(j) be
subrogated to, or substituted in respect of, the Noteholder’s claims under its Capital Notes, and otherwise have any
contractual relationship with, or rights against, the Issuer under or in relation to the Restricted Capital Notes.
For the avoidance of doubt, the granting of security in accordance with Condition 10(k) shall not constitute a transfer of an
interest under the Restricted Capital Notes for the purposes of this Condition 10(j).
(vi) As of the Issue Date and for so long as the Restricted Capital Notes are outstanding, the Issuer will ensure that it is in
compliance with the Non-Bank Rules, provided that the Issuer will not be in breach if either of the Non-Bank Rules are
exceeded solely by the failure by one or more Noteholders to comply with the limitations set forth in this Condition 10(j) or
in Condition 10(k).
(k) Grants of Security
If the applicable Final Terms provide that the Capital Notes are Restricted Capital Notes then the following provisions of this
Condition 10(k) shall apply but not otherwise. Any Noteholder may, without the consent of the Issuer, at any time charge or create
a security interest in all or any portion of its rights under any Restricted Capital Notes to secure obligations of such Noteholder;
provided that:
(i) no such charge or creation of a security interest shall:
(a) substitute any such chargee or holder of the benefit of such security interest for such Noteholder as Noteholder except in accordance with the provisions of Condition 10(j); or
(b) require any payments to be made by the Issuer other than as required by the Restricted Capital Notes. A copy of any
notice of charge or creation of security interest as envisaged in this paragraph shall be delivered to the Agent and the
Agent shall not be obliged to take any action in regard to such notice; and
(ii) such charge or security interest shall in each case provide that upon any assignment or transfer of the interest in the
Restricted Capital Notes or enforcement of such charge or security interest, any resulting assignment or transfer shall be in
accordance with Condition 10(j); and
(iii) the Noteholder promptly notifies the Registrar of any such charge or security interest and the secured party’s identity and
status by delivering to the Registrar a notification to such effect.
11. Agent, Paying Agents, Transfer Agents and Registrar
The names of the initial Agent, the other initial Paying Agents, the initial Registrar and the initial Transfer Agents and their initial
specified offices are set out below.
The Issuer is, with the prior written approval of the Trustee (such approval not to be unreasonably withheld), entitled to vary or
terminate the appointment of any Paying Agent, Registrar or Transfer Agent and/or appoint additional or other Paying Agents,
Registrars or Transfer Agents and/or approve any change in the specified office through which any Paying Agent, Registrar or
Transfer Agent acts, provided that:
(i) so long as the Capital Notes are listed on any stock exchange, there will at all times be a Paying Agent and a Transfer Agent
with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange;
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(ii) there will at all times be a Paying Agent with a specified office in a city approved by the Trustee in continental Europe;
(iii) there will at all times be an Agent and a Registrar;
(iv) there will at all times be a Transfer Agent having a specified office in a place approved by the Trustee;
(v) the Issuer undertakes that it will ensure that it maintains a Paying Agent and a Registrar in an EU member state (if any) that
will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive
implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any law implementing or
complying with, or introduced to conform to, such Directive; and
(vi) if legislation is enacted in Switzerland providing for the taxation of payments according to principles similar to those laid
down in the draft legislation proposed by the Swiss Federal Council on 24 August 2011, in particular, the principle to have a
person other than the Issuer withhold or deduct tax, the Issuer will use reasonable efforts to make payments in respect of the
Notes through a Paying Agent outside Switzerland, provided that the use of such Paying Agent outside Switzerland would
eliminate any Swiss withholding tax that would otherwise apply to payments from the Issuer.
In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances
described in the penultimate paragraph of Condition 5(b). Any variation, termination, appointment or change shall only take effect
(other than in the case of insolvency or where the Paying Agent is not, or ceases to be, a FATCA Compliant Entity, when it shall
be of immediate effect) after not less than 30 nor more than 45 days’ prior notice thereof shall have been given to the Noteholders
in accordance with Condition 13.
Notwithstanding the foregoing, the Issuer will in respect of any Listed Swiss Franc Capital Notes at all times maintain a Principal
Paying Agent having a specified office in Switzerland and will at no time maintain a Paying Agent having a specified office
outside Switzerland, unless permitted by applicable law.
As used herein:
"FATCA Compliant Entity" means a person payments to whom are not subject to FATCA Withholding; and
"FATCA Withholding" means any amount required to be withheld or deducted pursuant to the rules of U.S. Internal Revenue
Code Sections 1471 through 1474 (or any amended or successor provisions and any regulations and official guidance issued
thereunder) pursuant to any inter-governmental agreement, or implementing legislation adopted by another jurisdiction in connection with these provisions, or pursuant to any agreement with the US Internal Revenue Service.
12. Exchange of Talons
On and after the Interest Payment Date, as appropriate, on which the final Coupon comprised in any Coupon sheet matures, the
Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Agent or any other Paying
Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including)
the final date for the payment of interest due in respect of the Bearer Note to which it appertains) a further Talon, subject to the
provisions of Condition 8. Each Talon shall, for the purposes of these Terms and Conditions, be deemed to mature on the Interest
Payment Date (as the case may be) on which the final Coupon of the relative Coupon sheet matures.
13. Notices
All notices regarding the Bearer Notes shall be published (i) in a leading English language daily newspaper of general circulation
in London, (ii) if and for so long as such Bearer Notes are admitted to trading on the regulated market of the Luxembourg Stock
Exchange, on the website of the Luxembourg Stock Exchange (www.bourse.lu), (iii) (in the case of Listed Swiss Franc Capital
Notes) in a leading newspaper of general circulation in Switzerland which is expected to be the Feuille Officielle Suisse du Commerce and in a daily newspaper in each of Zurich and Geneva. It is expected that such publication will be made (in the case
of (i) above) in the Financial Times in London or any other daily newspaper in London approved by the Trustee or, if this is not
possible, in another English language daily newspaper approved by the Trustee with general circulation in Europe and on the
website of the Luxembourg Stock Exchange (www.bourse.lu). The Issuer shall also ensure that notices are duly published in a
manner which complies with the rules and regulations of any other stock exchange, listing authority and/or quotation system by
which the Capital Notes are for the time being admitted to listing, trading and/or quotation. To the extent required by Luxembourg law, notices shall also be published in the Mémorial C, Recueil des Sociétés et Associations (“Mémorial C”).
In the case of Bearer Notes and Registered Notes, if and to the extent required by the Luxembourg law of 11 January 2008 relating
to transparency obligations of issuers of securities implementing Directive 2004/109/EC of the European Parliament and of the
Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose
securities are admitted to trading on a regulated market and amending Directive 2001/34/EC as amended, notices will also be
published in accordance with the provisions of such law and implementing provisions. Any such notice will be deemed to have
been given on the date of the first publication or, where required to be published in more than one newspaper, on the first date on
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which publication in all the required newspapers has been made. If publication as provided above is not practicable, notice will be
given in such other manner, and will be deemed to have been given on such date, as the Trustee shall approve. Couponholders
shall be deemed for all purposes to have notice of the contents of any notice given to the relative Noteholders in accordance with
this Condition.
All notices to holders of Registered Notes will be valid if sent by first-class mail or (if posted to an overseas address) by air-mail
to their registered addresses appearing on the Register. Any such notice shall be deemed to have been given on the fourth day after
the day on which it is mailed. If and for so long as the relevant Registered Notes are admitted to trading on the regulated market of
the Luxembourg Stock Exchange, all notices regarding Registered Notes shall be published on the website of the Luxembourg
Stock Exchange (www.bourse.lu).
Until such time as any definitive Notes are issued, there may, so long as the global Note(s) is or are held in its/their entirety on
behalf of Euroclear and Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the
relevant notice to Euroclear and Clearstream, Luxembourg for communication by them to the holders of the Capital Notes and in
addition, for so long as any Capital Notes are listed on the Luxembourg Stock Exchange, a notice will be published on the website of the Luxembourg Stock Exchange (www.bourse.lu). Any such notice shall be deemed to have been given to the holders of the
Capital Notes on the seventh day after the day on which the said notice was given to Euroclear and Clearstream, Luxembourg.
Notices to be given by any holder of the Capital Notes shall be in writing and given by lodging the same, together with the relative
Capital Note or Capital Notes, with the Agent. Whilst any of the Capital Notes are represented by a Global Note, such notice may
be given by any holder of a Capital Note to the Agent and/or the Registrar via Euroclear and/or Clearstream, Luxembourg, as the
case may be, in such manner as the Agent and/or the Registrar and Euroclear and/or Clearstream, Luxembourg, as the case may
be, may approve for this purpose.
14. Meetings of Noteholders, Modification and Waiver, Entitlement of Trustee, Substitution, Change and Indemnification of Trustee
(a) Single Noteholder
In relation to any Restricted Capital Notes so long as there is only one Noteholder thereof, who shall certify to the Trustee that it is
the sole Noteholder of the Capital Notes and is not holding such Notes as a depositary for, or nominee of, Euroclear, Clearstream,
Luxembourg on or prior to any such amendment, waiver or variation being made (i) no amendment, waiver or variation of the
Capital Notes or the Trust Deed may be made without the prior written consent of such Noteholder and parties to the Trust Deed
and (ii) the meeting, quorum and voting provisions of Condition 14(b) shall not apply.
(b) Meetings of Noteholders
The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of such Capital Notes, the relative Coupons or any
relevant provisions of the Trust Deed. Such a meeting may be convened by the Issuer, the Trustee or at the request of Noteholders
holding not less than 10 per cent in nominal amount of the Capital Notes for the time being outstanding. The quorum at any such
meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than 50 per cent in
nominal amount of the Capital Notes for the time being outstanding, or at any adjourned meeting one or more persons being or
representing Noteholders whatever the nominal amount of the Capital Notes so held or represented, except that at any meeting the
business of which includes the modification of certain provisions of the Trust Deed, the Capital Notes or Coupons (including
modifying the dates for redemption of the Capital Notes or any date for payment of interest thereon, reducing or cancelling the
amount of principal or the rate of interest payable in respect of the Capital Notes, varying the method of calculating the rate of
interest on the Capital Notes or altering the currency of payment of the Capital Notes or Coupons, varying, amending or granting a
waiver in relation to Condition 2, 3, 4, 5 or 6, modifying the provisions concerning the quorum required at any meeting of the
Noteholders or the majority required to pass an Extraordinary Resolution or modifying the percentage required to pass any resolution), the quorum shall be one or more persons holding or representing not less than two-thirds in nominal amount of the
Capital Notes for the time being outstanding, or at any adjourned such meeting one or more persons holding or representing not
less than one-third, in nominal amount of the Capital Notes for the time being outstanding. An Extraordinary Resolution duly
passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting,
and on the relevant Couponholders. The Trust Deed provides that a written resolution signed by or on behalf of the holders of not
less than 75 per cent in nominal amount of Capital Notes outstanding shall be as valid and effective as a duly passed Extraordinary
Resolution. The provisions for convening meetings of Noteholders contained in the Trust Deed shall not apply to Listed Swiss
Franc Capital Notes.
The provisions of Articles 1157-1186 of the Swiss Code of Obligations will apply to all meetings of holders of Capital Notes.
(c) Modification and Waiver
The Trust Deed provides that the Trustee may agree, without the consent of the Noteholders or Couponholders, to any
modification (subject to certain exceptions as provided in the Trust Deed) of, or to any waiver or authorisation of any breach or
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proposed breach of, any of these Terms and Conditions or any of the provisions of the Trust Deed, which in any such case, in the
opinion of the Trustee, is not materially prejudicial to the interests of the Noteholders or to any modification of any of these Terms
and Conditions of the Capital Notes, the Coupons or any of the provisions of the Trust Deed which is of a formal, minor or
technical nature or which is made to correct a manifest error or to comply with mandatory provisions of law. Any such modification, waiver, authorisation or determination shall be binding on the Noteholders and Couponholders and, unless the
Trustee agrees otherwise, any such modification, waiver, authorisation or determination shall be notified to the Noteholders as
soon as practicable thereafter in accordance with Condition 13.
(d) Powers and Discretions
In connection with the exercise by it of any of its trusts, powers, authorities or discretions (including, but without limitation, any
modification, waiver, authorisation or substitution), the Trustee shall have regard to the interests of the Noteholders as a class and,
in particular, but without limitation, shall not have regard to the consequences of such exercise for individual Noteholders or
Couponholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the
jurisdiction of, any particular territory and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, or any other person any indemnification or payment in respect of any tax consequence of any
such exercise upon individual Noteholders or Couponholders except, in the case of the Issuer, to the extent provided for in
Condition 7 and/or any undertaking given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed.
The Trust Deed contains provisions permitting the Trustee to agree, without the consent of the Noteholders or the Couponholders,
to the substitution at any time or times of the Issuer as the principal debtor under the Trust Deed and the Capital Notes and
Coupons. The Issuer may at any time with the agreement of the Trustee as aforesaid, without the consent or approval of the
Noteholders, substitute for itself as principal debtor under the Capital Notes a successor in business to the Issuer or such
substitute, being a duly licensed and regulated entity that carries on the business of an insurance company within the Zurich
Insurance Group.
The Issuer may only transfer its obligations under the Capital Notes if (i) the rating assigned by both Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Rating Services, a division of the McGraw-Hill Companies, Inc. (“S&P”) or its
successor to the transferee’s senior unsecured debt is equal to or higher than the senior unsecured debt rating of the Issuer
immediately after such transfer (it being understood that if such senior unsecured debt is rated by only one of Moody’s or S&P or
their respective successors immediately prior to such transfer, then only the then existing rating must be equal to or higher than the
corresponding ratings immediately after such transfer) and the transferee is an affiliate of ZIG and is engaged in the same line of
business that the Zurich Insurance Group is engaged in on the date of such transfer or (ii) the transfer is approved by the holders of
the Capital Notes in the manner set out in Condition 14(a) above, provided that the foregoing shall not preclude the Issuer from
transferring its obligations under the Capital Notes where such transfer is pursuant to the transfer of substantially all of the Issuer’s
assets and obligations to another entity pursuant to any merger, consolidation or corporate reorganisation or by operation of law in
which case neither the rating condition nor the approval of the holders of the Capital Notes will be required.
Notwithstanding the above, by subscribing to or purchasing the Capital Notes, the Noteholders expressly consent to the
substitution of the Issuer on the conditions referred to above and expressly consent to the release of the Issuer from any and all
obligations in respect of the Capital Notes and are deemed to have expressly accepted such substitution. Such agreement shall be
subject to the relevant provisions of the Trust Deed.
The Trust Deed contains general provisions for the retirement and removal of the Trustee and the appointment by the Issuer of a
substitute issuer which has previously been approved by the Trustee.
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including
provisions relieving it from taking action unless indemnified and/or secured to its satisfaction.
15. Further Issues
The Issuer shall be at liberty from time to time without the consent of the Noteholders or Couponholders to create and issue
further notes having terms and conditions the same as the Capital Notes or the same in all respects save for the amount and date of
the first payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding
Capital Notes.
16. Governing Law and Submission to Jurisdiction
(a) The Trust Deed (other than the provisions relating therein to subordination which shall be governed by, and construed in
accordance with, the laws of Switzerland), the Capital Notes (other than the provisions of Condition 2 which shall be
governed by, and construed in accordance with, the laws of Switzerland) and the Coupons and any non- contractual
obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, English
law.
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(b) The Issuer has agreed in the Trust Deed, for the exclusive benefit of the Trustee, the Noteholders and the Couponholders,
that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the
Capital Notes and/or the Coupons and that accordingly any suit, action or proceedings (together referred to as
“Proceedings”) arising out of or in connection with the Capital Notes and the Coupons may be brought in such courts.
(c) The Issuer has irrevocably waived in the Trust Deed any objection which it may have now or hereafter to the laying of the
venue of any such Proceedings in any such court and any claim that any such Proceedings have been brought in an
inconvenient forum.
(d) Nothing contained in this Condition shall limit any right to take Proceedings against the Issuer in any other court of
competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in
any other jurisdiction, whether concurrently or not.
(e) The Issuer has appointed Zurich Insurance plc, UK branch at its registered office for the time being as its agent for service of
process in respect of any Proceedings in England and has undertaken in the Trust Deed that, in the event of Zurich Insurance plc, UK branch ceasing so to act or ceasing to be registered in England, it will appoint another person as its agent for service
of process in England in respect of any Proceedings in England.
(f) Nothing herein shall affect the right to serve proceedings in any other manner permitted by law.
(g) In respect of Listed Swiss Franc Capital Notes only, the Issuer and the Trustee have agreed in the Trust Deed for the benefit
of the Noteholders and the Couponholders to the additional jurisdiction of the courts of the City of Zurich, venue Zurich 1,
with the right of appeal, where the law permits, to the Swiss Federal Court of Justice in Lausanne, the decision of which
shall be final.
17. Contracts (Rights of Third Parties) Act 1999 No person shall have any right to enforce any term or condition of this Capital Note or the Trust Deed under the United Kingdom
Contracts (Rights of Third Parties) Act 1999.
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USE OF PROCEEDS
The net proceeds from each issue of Notes by ZF (Luxembourg) will be used either to refinance existing debt of the Zurich
Insurance Group or, alternatively, for general corporate purposes, in each case outside Switzerland unless use in Switzerland is
permitted under the Swiss taxation laws in force from time to time without payments in respect of the Notes becoming subject to
withholding or deduction for Swiss withholding tax as a consequence of such use of proceeds in Switzerland.
The net proceeds from each issue of Notes and Capital Notes by ZIC will be used in Switzerland to refinance existing debt of ZIC
or, alternatively, for general corporate purposes.
The net proceeds from each issue of Notes by ZF (UK) will be used either to refinance existing debt of the Zurich Insurance
Group or, alternatively, for general corporate purposes, in each case outside Switzerland unless use in Switzerland is permitted
under the Swiss taxation laws in force from time to time without payments in respect of the Notes becoming subject to
withholding or deduction for Swiss withholding tax as a consequence of such use of proceeds in Switzerland.
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ZURICH INSURANCE COMPANY LTD
GENERAL INFORMATION
Overview of the ZIC Group structure
ZIC is a public limited liability company (Aktiengesellschaft) founded for an unlimited duration and operating under the Swiss
Code of Obligations and Swiss insurance law and regulation and incorporated in the commercial register of the Canton of Zurich,
Switzerland on 16 July 1884. Its registered office is at Mythenquai 2, CH-8002 Zurich, Switzerland (telephone: +41 44 625 25
25) and its registered number is CH-020.3.929.583-0. The articles of incorporation of ZIC date from 6 April 2009. The purpose of
ZIC is to conduct all kinds of insurance and reinsurance businesses, except for direct life insurance business. The fiscal year of ZIC begins on 1 January and terminates on 31 December of each year.
ZIC Group is a provider of insurance-based products which also distributes non-insurance products from selected third-party
providers. The ZIC Group operates mainly in Europe, the USA, Latin America and Asia Pacific through subsidiaries, branch and
representation offices. ZIC as such has a dual function, firstly as an insurer, operating through branch offices in Switzerland and
other countries, and secondly as a holding company.
ZIC is owned by ZIG, the ultimate parent company of the ZIC Group. ZIG is a public limited liability company
(Aktiengesellschaft) under Swiss Law and is incorporated in Zurich, Switzerland. Its registered office is at Mythenquai 2, CH-
8002 Zurich, Switzerland. ZIG has a listing on the SIX Swiss Exchange.
Share Information
The share capital of ZIC amounts to CHF 825,000,000, divided into 82,500,000 issued and fully paid-up registered shares with a
par value of CHF 10 each. The transfer of shares is subject to the board of directors’ consent. The board of directors may further
delegate such consent.
ZIC paid an ordinary dividend of CHF 2.5 billion on 9 April 2014 in respect of the financial year 2013. In 2013, ZIC paid an
ordinary dividend of CHF 2.2 billion in respect of the financial year 2012 and in 2012 an ordinary dividend of CHF 2.4 billion in
respect of the financial year 2011.
Notices Notices are given by ZIC by publication in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt). Notices
to shareholders are given by ZIC by ordinary mail to the addresses registered in the share register unless otherwise provided by
law or the articles of incorporation of ZIC.
Business and Strategy
The ZIC Group’s strategy for 2014-2016 is designed to deliver sustainable, profitable growth in a changing and more competitive
business environment. It builds on the ZIC Group’s strength and places customers and their needs at the center of the business.
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The ZIC Group is investing for growth in mature and emerging markets with the highest potential, managing other businesses for
value, and growing operating earnings by further reducing complexity and operational costs while extracting additional profits
from the business and investments. As a provider of insurance-based products, the ZIC Group also distributes non-insurance
products, such as mutual funds and other financial services products, from selected third-party providers. The ZIC Group operates mainly in Europe, the USA, Latin America and Asia Pacific through subsidiaries, branch offices and representations.
The Segments
The ZIC Group pursues a customer-centric strategy and is managed on a matrix basis, reflecting both businesses and geography.
The ZIC Group’s operating segments have been identified on the basis of the businesses operated by the ZIC Group and how
these are strategically managed to offer different products and services to specific customer groups. Segment information is
presented accordingly. The ZIC Group’s reportable segments are as follows:
� General Insurance provides a variety of motor, home and commercial products and services for individuals, as well as
small and large businesses.
� Global Life pursues a strategy of providing market-leading, unit-linked protection and corporate propositions through
global distribution and proposition pillars to develop leadership positions in its chosen segments.
� Farmers, through Farmers Group, Inc. and its subsidiaries (FGI), provides non-claims related management services to the
Farmers Exchanges. FGI receives fee income for the provision of services to the Farmers Exchanges, which are owned
by their policyholders and managed by Farmers Group, Inc. a wholly owned subsidiary of the ZIC Group. This segment
also includes all reinsurance assumed from the Farmers Exchanges by the ZIC Group. Farmers Exchanges are prominent
writers of personal and small commercial lines of business in the U.S.
For the purpose of discussing financial performance the ZIC Group considers General Insurance, Global Life and Farmers to be its
core business segments.
Other Operating Businesses predominantly consist of the ZIC Group’s Headquarter and Holding and Financing activities. Certain
alternative investment positions not allocated to business operating segments are included within Holding and Financing.
Non-Core Businesses include insurance and reinsurance businesses that the ZIC Group does not consider core to its operations
and that are therefore mostly managed to achieve a beneficial run-off. Non-core businesses are mainly situated in the U.S.,
Bermuda, and the UK.
The ZIC Group Key Segmental Information
Audited consolidated figures of the ZIC Group
in USD millions, as reported for the year ended 31 December 2013
Gross written
premiums and
policy fees
Total BOP1
revenues
Net income/(loss)
before income taxes
General Insurance ............................................................................................................................. 36,438 32,983 3,135
Global Life ........................................................................................................................................ 13,916 31,229 1,702
Farmers .............................................................................................................................................. 4,045 7,095 1,510
Other Operating Businesses ............................................................................................................. 109 1,080 (436)
Non-Core Businesses........................................................................................................................ 535 341 192
Total ZIC Group(*) .......................................................................................................................... 54,849 70,996 6,103
* The Total ZIC Group information is presented after elimination of the inter-segment transactions, and as such does not reflect the sum of segment figures.
1Business Operating Profit (BOP): This measure is the basis on which business units are managed. It indicates the underlying
performance of the business units, after non-controlling interests, by eliminating the impact of financial market volatility and other non-operational variables. BOP reflects adjustments for shareholders’ taxes, net capital gains on investments and
impairments (except for the capital markets and property lending / banking operations included in Non-Core Businesses and
investments in hedge funds, certain securities held for specific economic hedging purposes and policyholders’ share of
investment results for the life businesses) and non-operational foreign exchange movements. Significant items arising from
special circumstances, including restructuring charges, charges for litigation outside the ordinary course of business and gains and
losses on divestments of businesses, impairments of goodwill and the change in estimates of earn-out liabilities (with the
exception of experience adjustments, which remain within BOP) are also excluded from BOP.
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The ZIC Group Key Financial Information
in USD millions
As at or for the
year ended 31 December
2013 (audited)
As at or for the
year ended 31 December
2012 - as restated
(unaudited)
As at or for the year ended 31 December
2012 restatements (unaudited)*
As at or for the year ended
31 December 2012 - as
previously reported (audited)
Gross written premiums and policy fees ............................ 54,849 53,977 0 53,977
Net written premiums and policy fees ................................ 48,303 47.496 0 47,496
Net investment result on Group investments ..................... 7,504 9,059 72 8,987
Net income before income taxes ......................................... 6,103 5,596 9 5,587
Net income after taxes attributable to shareholders........... 4,127 3,971 9 3,963
Total investments ................................................................. 341,783 333,249 (438) 333,687
Reserves for insurance contracts......................................... 265,440 265,233 0 265,233
Shareholders’ equity ............................................................ 31,851 33,896 11 33,885
*For details please refer to “Restatements and reclassifications” below. For more information please refer to tables 1.2 and 1.3 of the ZIC Group’s annual report 2013 page 66 and 67.
Restatements and reclassifications The table above also shows the impacts of the restatement as a result of implementing IAS 19 “Employee Benefits” and IFRS 10 “Consolidated Financial Statements” on the consolidated income statement for the year ended 31 December 2012 and the
consolidated balance sheet as of 31 December 2012. Consolidated income statements, consolidated balance sheets, consolidated
statements of comprehensive income, consolidated statements of changes in equity, consolidated statements of cash flows and
notes 6, 9, 11, 13, 17, 18, 19, 21, 22, 25, 26, 28 and 29 of the ZIC Group’s annual report 2013 have been restated accordingly. The
information in the consolidated financial statements of the ZIC Group as of and for the years ended 31 December 2012 and 2011
included in the ZIC Group’s annual report 2012 has not been restated for these impacts.
The presentation of deferred bonuses allocated to policyholders had been aligned across the ZIC Group. There was no impact to
the ZIC Group’s consolidated income statement. As a result of this alignment, there was a corresponding reduction in both
deferred front-end fees and deferred policy acquisition costs. The impact of the reduction in deferred policy acquisition costs is
set-out in note 12 of the ZIC Group’s annual report 2013.
The presentation of indemnity commission has been aligned across the ZIC Group with no impact on the ZIC Group’s
consolidated income statement. As a result of this alignment, there is a transfer from receivables and other assets to deferred
policy acquisition costs. The impact of the increase in deferred policy acquisition costs is set-out in note 12 of the ZIC Group’s
annual report 2013.
Subsequent Events
Result release On 15 May 2014, ZIG, the ultimate parent company of ZIC, published its unaudited consolidated interim financial statements as of and for the three-month period ended 31 March 2014.
Changes to the Board of Directors On 2 April 2014 the Ordinary General Meeting newly elected Christoph Franz to the Board of Directors. Victor L.L. Chu and Rolf Watter confirmed their retirement from the Board of Directors. Tom de Swaan was re-elected as Chairman for a further term of office of one year. In its constituent meeting held after the General Meeting, the Board of Directors re-elected Fred Kindle as Vice-Chairman.
2014 Dividend payment The ZIG Annual General Meeting approved a gross dividend of CHF 17.00 per share on 2 April 2014. This gross dividend represented a 69 per cent payout of 2013 earnings to shareholders, and was paid out from the capital contribution reserve within shareholders' equity during the second quarter of 2014.
Zurich to streamline organisation in line with strategic priorities
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Further progress was made during April 2014 on ZIG’s initiative for organisational alignment to reduce both complexity and
costs. This will result in a loss of a maximum of approximately 800 jobs throughout the global organisation. Related consultation
processes are about to be closed. The changes are expected to lead to restructuring provisions of approximately USD 100 million,
largely impacting 2014.
Amendments to and implementation of new accounting standards
The following amendments to accounting standards and interpretations of standards relevant to the ZIC Group have been
implemented for the financial year beginning 1 January 2013 with no material impact on ZIC Group’s financial position or
performance:
� IFRS 10 “Consolidated Financial Statements”
� IFRS 11 “Joint Arrangements”
� IFRS 12 “Disclosure of Interests in Other Entities”
� IFRS 13 “Fair Value Measurement”
� Amendments to IAS 1 “Presentation of items of Other Comprehensive Income (OCI)”
� Amendments to IAS 19 “Employee Benefits”
� Amendments to IAS 27 “Separate Financial Statements”
� Amendments to IAS 28 “Investments in Associates and Joint Ventures”
� Amendments to IFRS 7 “Disclosures – Offsetting Financial Assets and Financial Liabilities”
The following new accounting standards or amendments to and interpretations of standards relevant to ZIC Group have been implemented for the financial year beginning 1 January 2014 with no material impact on ZIC Group’s financial position or performance:
� IFRIC 21 “Levies” will be effective for annual periods beginning on or after 1 January 2014. � Amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities” will be effective for annual periods
beginning on or after 1 January 2014. � Amendments to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” will be effective for annual
periods beginning on or after 1 January 2014.
The following standard is not yet effective and the impact on the consolidated financial statements will be assessed in conjunction with the revised standard IFRS 4 “Insurance Contracts”:
� IFRS 9 “Financial Instruments” (effective date is pending).
Appropriation of Available Earnings On 2 April 2014, it was approved at the annual general meeting of ZIC to pay out a dividend of CHF 2,500,000,000 and to carry forward available earnings of CHF 6,611,181,760.
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Board of Directors of ZIC (as at the date of this Base Prospectus)
Name Nationality Function Principal Occupation
Tom de Swaan....................Dutch Chairman of the Board Skills and experience: Mr. de Swaan has served in the banking industry of The Netherlands for over 40 years. He joined De Nederlandsche Bank N.V. in 1972 and from 1986 until 1998 was a member of the governing board. In January 1999, he became a member of the managing board and chief financial officer of ABN AMRO Bank. He retired from ABN AMRO in May 2006, but continued as an advisor to the managing board until June 2007. Between 1987 and 1988, Mr. de Swaan was chairman of the Amsterdam Financial Center and from 1995 to 1997 chairman of the banking supervisory sub-committee of the European Monetary Institute. He was also a member of the Basel Committee on Banking Supervision from 1991 to 1996, its chairman from 1997 to 1998 and a non-executive director on the board of the UK’s Financial Services Authority from January 2001 until the end of 2006. He has been a member of the Boards of Zurich Insurance Group Ltd and of Zurich Insurance Company Ltd since April 2006. In March 2012 he was elected Vice-Chairman, acting as Chairman from August 2013 on. He was elected Chairman of the Board in September 2013.
Committee membership: Governance and Nominations Committee (Chairperson), Remuneration Committee.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd, Zurich Insurance plc.
External appointments: Mr. de Swaan has been a non-executive member of the board of GlaxoSmithKline Plc since 2006. He has been a member of the supervisory board of Royal DSM, a Netherlands-based nutrition group, since 2006 and chairman of the supervisory board of Van Lanschot NV, the holding company of F. van Lanschot Bankiers, an independent Dutch bank, since 2008. In addition Mr. de Swaan is chairman of the board of the Netherlands Cancer Institute, chairman of the board of trustees of the Van Leer Jerusalem Institute and acts as director of certain other non-profit organisations. He is also a member of the advisory board of China Banking Regulatory Committee in Beijing and a member of the International Advisory Board of the National Bank of Kuwait since 2007.
Educational background: Mr. de Swaan graduated from the University of Amsterdam with a master’s degree in economics.
Fred Kindle.........................Citizen of
Fürstentum Liechtenstein and Switzerland
Vice-Chairman of
the Board
Skills and experience: Mr. Kindle began working as a
marketing project manager with Hilti AG in Liechtenstein from 1984. From 1988 until 1992, he was a consultant
with McKinsey & Company in New York and Zurich. He
then joined Sulzer Chemtech AG in Switzerland as the
head of the Mass Transfer Department and in 1996
became the head of the Product Division. In 1999, he was
appointed CEO of Sulzer Industries, one of the two
operating groups of Sulzer AG. Two years later he
became CEO of Sulzer AG, where he also served as a
board member. After joining ABB Ltd. in 2004, Mr.
Kindle was appointed CEO of ABB Group in January
2005, a position he held until February 2008. He then became a partner of Clayton, Dubilier & Rice LLP, a
private equity firm based in New York and London. He
has been a member of the Boards of Zurich Insurance
Group Ltd and of Zurich Insurance Company Ltd since
April 2006. He was elected Vice-Chairman in September
2013.
Committee membership: Governance and Nominations
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Committee, Audit Committee.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd.
External appointments: In his capacity as a partner of Clayton, Dubilier & Rice, Mr. Kindle has served as a
chairman of Exova Ltd., Scotland since 2008 and as a
chairman of BCA Group, United Kingdom since 2010. He
has also been on the board of VZ Holding Ltd., Zurich
since 2002 and Stadler Rail AG, Bussnang since 2008. Educational background: Mr. Kindle graduated from the Swiss Federal Institute of Technology (ETH) in Zurich with a master’s degree in engineering and holds an MBA from Northwestern University, Evanston, United States.
Susan Bies ..........................American Member of the Board Skills and experience: Ms. Bies began her career in 1970
as regional and banking structure economist with the
Federal Reserve Bank of St. Louis, Missouri and two
years later became assistant professor of economics at
Wayne State University, Detroit, Michigan. In 1977, she
moved to Rhodes College, Memphis, Tennessee, in a similar role and in 1979 joined First Tennessee National
Corporation in Memphis, where she remained until 2001.
During the early years, her areas of responsibility
included tactical planning and corporate development. In
1984, she became chief financial officer and chairman of
the asset/liability committee. In 1995, she became
executive vice president of risk management and auditor
and chairman of the risk management committee, as well
as continuing her duties with the asset/liability committee.
From 2001 until 2007, she was a member of the board of
governors of the Federal Reserve System. Between 1996 and 2001, Ms. Bies was a member of the Emerging Issues
Task Force of the Financial Accounting Standards Board.
She has been a member of the Boards of Zurich Insurance
Group Ltd and of Zurich Insurance Company Ltd since
April 2008.
Committee membership: Risk Committee
(Chairperson), Audit Committee.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd, Zurich Holding
Company of America, Inc.
External appointments: Susan Bies has served as a
member of the board of directors of The Bank of America Corporation since June 2009, and joined the board of
directors of Merrill Lynch International, London, a
subsidiary of Bank of America Corporation, in 2013. She
has also been a member of the Senior Advisory Board of
Oliver Wyman since 2009. Susan Bies is a member of the
board of trustees of the Global Association of Risk
Professionals (GARP). Educational background: Ms. Bies graduated with a BS degree from the State University College at Buffalo, New York and with a MA degree from Northwestern University, Evanston, where she later gained a PhD.
Dame Alison Carnwath .....British Member of the Board Skills and experience: Dame Alison Carnwath has
substantial financial industry experience. She began her
career with Peat Marwick Mitchell, now KPMG, in 1975
to 1980 and practiced as a chartered accountant. From
1980 to 1982, she worked as a corporate financier for
Lloyds Bank International. From 1982 to 1993, she was
Assistant Director, then Director at J. Henry Schroder
Wagg & Co in London and New York. From 1993 to 1997, Dame Alison Carnwath was a Senior Partner at the
financial advisory firm Phoenix Partnership. The firm was
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taken over by Donaldson Lufkin Jenrette (DLJ) in late
1997; Dame Alison Carnwath continued working for DLJ
until 2000. Dame Alison Carnwath has held several board
offices. From 2000 to 2005, she was the Chairman of the board of Vitec Group plc, from 2001 to 2006 a director of
Welsh Water, from 2004 to 2007 of Friends Provident plc,
from 2004 to 2007 of Gallaher Group and from 2007 to
2010, she was the independent Chairman of MF Global
Inc. She also served on the boards of directors of Barclays
from 2010 to 2012, and of Man Group plc from 2001 to
2013. She has been a member of the Boards of Zurich
Insurance Group Ltd and of Zurich Insurance Company
Ltd since March 2012. She was awarded a Dame of the
British Empire (DBE) in the 2014 New Years Honours
List in the UK. Committee membership: Remuneration Committee,
Risk Committee.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd.
External appointments: Dame Alison Carnwath has
been a Senior Advisor of Evercore Partners since 2011
and an independent Chairman of ISIS Equity Partners
LLP since 2000. She has been a Chairman of the Board of
Land Securities Group plc since 2008 and a member of
the board of PACCAR Inc. since 2005. Dame Alison
Carnwath is also a Trustee of the British Library. In
September 2013, she was appointed to the advisory council of the St George’s Society in New York. Educational background: Dame Alison Carnwath graduated in economics and German from the University of Reading. She was also awarded an honorary doctorate (LLB) from the University of Reading.
Rafael del Pino…………. Spanish Member of the Board Skills and experience: Mr. del Pino possesses more than
30 years of international management experience. From
1992 to 1999, he was CEO of Grupo Ferrovial and in 1999, he was appointed executive vice-chairman. In 2000,
Mr. del Pino assumed the position of executive chairman
and managing director of Ferrovial S.A. During his career
at Ferrovial he has transformed the company from a
mostly domestic construction company to a leading
provider of infrastructure services around the world. In
addition, Mr. del Pino was a member of the board of
Banesto (Banco Español de Crédito S.A.) from 2003 to
2012. He has been a member of the Boards of Zurich
Insurance Group Ltd and of Zurich Insurance Company
Ltd since March 2012. Committee membership: Governance and Nominations
Committee, Remuneration Committee.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd.
External appointments: Mr. del Pino has been a member
of the International Advisory Board of Blackstone since
2007. He also maintains contact with the academic world
through membership on the MIT Corporation, the
International Advisory Board of IESE and the European
Advisory Board of Harvard Business School. Educational background: Mr. del Pino graduated in civil engineering from the Universidad Politécnica Madrid and obtained an MBA from MIT Sloan School of Management.
Thomas K. Escher ..............
Swiss Member of the Board Skills and experience: Mr. Escher has extensive
experience in the fields of information technology and
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banking. He joined IBM in 1974 and had managerial
responsibility for several international markets. In 1996,
Mr. Escher joined Swiss Bank Corporation as a member
of the executive board and was CEO for the major market region in Switzerland and for the information technology
organisation. Following the merger of Swiss Bank
Corporation and Union Bank of Switzerland to form UBS
AG in 1998, he headed the IT business area of the wealth
management and business banking division until mid-
2005 as a member of the group managing board. Mr.
Escher assumed the function of vice-chairman in the
Business Group Global Wealth Management & Swiss
Bank of UBS AG in 2005. He has been a member of the
Boards of Zurich Insurance Group Ltd and of Zurich
Insurance Company Ltd since April 2004. Committee membership: Remuneration Committee
(Chairperson), Governance and Nominations Committee
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd
External appointments: Mr. Escher has been a member
of the board of directors of Silent-Power AG of Cham,
Switzerland, a company in the alternative energy field,
since 2012, and its Chairman since 2013. Furthermore Mr.
Escher has been the president of the Genossenschaft zum
Rüden since 2010. Educational background: Mr. Escher graduated in electrical engineering and in Business Administration from the Swiss Federal Institute of Technology (ETH).
Christoph Franz..................German Member of the Board Skills and experience: Mr. Franz started his professional career in 1990 at Lufthansa AG. From 1994 until 2004 he held different executive functions at Deutsche Bahn AG, among others as member of the executive board and CEO of the passenger transport division. In 2004 he became CEO of Swiss International Air Lines AG, and in 2009 was promoted to the role of Deputy Chairman of the executive board of Deutsche Lufthansa AG and CEO Passenger Airlines. In 2011, Mr. Franz became Chairman of the executive board and CEO of Deutsche Lufthansa AG. He will hold these roles until the end of April 2014. He became a member of the Boards of Zurich Insurance Group Ltd and Zurich Insurance Company Ltd in April 2014.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd. External appointments: Christoph Franz was elected Chairman of the Board of Roche Holding Ltd on March 4, 2014. He is also Vice-Chairman of Swiss Intl. Airlines AG and a member of the Board of Directors of Stadler Rail AG.
Educational background: Mr. Franz studied industrial engineering at the Technical University Darmstadt (Germany) and completed his studies with a PhD in economic sciences (Dr. rer. pol.) at the same university. He also studied at the Ecole Centrale de Lyon and the Ecole Supérieure de Commerce de Lyon (France) and did a post-doctorate research stint at the University of California, Berkeley.
Monica Mächler .................Swiss Member of the Board Skills and experience: Monica Mächler has substantial
legal, regulatory and governance expertise in a national
and international context. Monica Mächler served as Vice-Chair of the Board of Directors to the integrated
Swiss Financial Market Supervisory Authority (FINMA)
from 2009 to 2012, after having been the Director of the
Swiss Federal Office of Private Insurance from 2007 to
2008. From 2010 to 2012, Ms. Mächler chaired the
Technical Committee of the International Association of
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Insurance Supervisors (IAIS). She assumed the roles of
Group General Counsel and Head of the Board Secretariat
of Zurich Insurance Group from 1999 to 2006 and was
appointed a member of the Group Management Board in 2001 after joining in 1990. During the years 1985 to 1990
she was in private practice specialising in banking and
business law. Monica Mächler has been a member of
several Swiss federal expert commissions on regulatory
projects and is regularly speaking, lecturing as well as
publishing on international business law and regulation
and their impact. She has been a member of the Boards of
Zurich Insurance Group Ltd and of Zurich Insurance
Company Ltd since April 2013.
Committee membership: Governance and Nominations
Committee, Risk Committee.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd.
External appointments: Ms. Mächler has been a
member of the Supervisory Board of Directors of
Deutsche Börse AG since May 2012. She also serves on
the Advisory Board of the International Center for
Insurance Regulation at the Goethe University Frankfurt
am Main.
Educational background: Monica Mächler earned her
JD at the University of Zurich’s Law School and
complemented her studies by attending programs on UK,
U.S. and private international law. She is admitted to the bar of the Canton of Zurich.
Don Nicolaisen...................American Member of the Board Skills and experience: Mr. Nicolaisen has substantial
expertise in accounting, auditing and financial reporting.
He joined Price Waterhouse in 1967 (which subsequently
became PricewaterhouseCoopers or PwC) and was
admitted to partnership in 1978. He served in various
capacities, including as an auditor and as chairman of
their financial services practice. Mr. Nicolaisen also led
PwC’s national office for accounting and Securities and
Exchange Commission services from 1988 to 1994 and
served on both the U.S. and global boards of PwC from
1994 to 2001. From September 2003 to November 2005, he was Chief Accountant of the U.S. Securities and
Exchange Commission and was principal adviser to the
Commission on accounting and auditing matters. He has
been a member of the Boards of Zurich Insurance Group
Ltd and of Zurich Insurance Company Ltd since April
2006.
Committee membership: Audit Committee
(Chairperson), Risk Committee.
Other directorships within the Zurich Insurance Group: Zurich Insurance Group Ltd, Zurich Holding
Company of America, Inc. External appointments: Mr. Nicolaisen has been a
member of the board of directors of Verizon
Communications Inc. since 2005, Morgan Stanley since
2006 and MGIC Investment Corporation since 2006. In
addition, he serves on the board of advisors for the
University of Southern California Leventhal School of
Accounting. Educational background: Mr. Nicolaisen graduated from the University of Wisconsin-Whitewater with a BBA degree.
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The business address of each member of the Board of Directors is Mythenquai 2, CH-8002 Zurich, Switzerland. All directors are non-executive, independent of management, and except for Ms. Monica Mächler have never held an executive position in the Zurich Insurance Group. Monica Mächler joined Zurich Insurance Group in 1990, she assumed the roles of Group General Counsel and Head of the Board Secretariat from 1999 to 2006 and was appointed a member of the Group Management Board in 2001. She left the company in 2006. Therefore, according to the guidelines of the Swiss Code of Best Practice for Corporate Governance Ms. Mächler meets the requirements with regard to independence. All directors also serve on the Board of Directors of ZIG. As at the date of this Base Prospectus, there are no potential conflicts of interests between the duties of any member of the Board of Directors of ZIC owed to ZIC and their private interests and/or other duties. If a potential conflict arises in the future, it would be subject to the applicable provisions of Swiss company law and the organisational rules of ZIC relating to proceedings at meetings of the Board of Directors. Group Executive Committee of ZIC (as at the date of this Base Prospectus)
Name Nationality Function Martin Senn ...................................................... Swiss Chief Executive Officer Jeff Dailey ........................................................ U.S. American Chief Executive Officer - Farmers Group, Inc. Mike Foley ....................................................... U.S. American CEO North America Commercial and Regional
Chairman of North America Robert Dickie ................................................... British Citizen Chief Operations and Technology Officer Yannick Hausman ............................................ Swiss Group General Counsel Michael Kerner ................................................ U.S. American CEO General Insurance Axel P. Lehmann ............................................. Swiss Chief Risk Officer and Regional Chairman of Europe George Quinn ................................................... British Citizen Chief Financial Officer Cecilia Reyes.................................................... Swiss/Philippine Chief Investment Officer Geoffrey (Geoff) Riddell ................................. British Regional Chairman of Asia-Pacific & Middle East Kristof Terryn .................................................. Belgian CEO Global Life
The business address of each member of the Group Executive Committee of ZIC is Mythenquai 2, CH-8002 Zurich, Switzerland. As at the date of this Base Prospectus, there are no potential conflicts of interests between the duties of any member of the Group Executive Committee of ZIC owed to ZIC and their private interests and/or other duties. If a potential conflict arises in the future, it would be subject to the applicable provisions of Swiss company law and the organisational rules of ZIC relating to proceedings at meetings of the Group Executive Committee of ZIC.
Regulation ZIC conducts its operations in Switzerland under operating licences for all lines of general insurance business. The operations of ZIC are subject to continued supervision by FINMA based on the Swiss Insurance Supervision Law (“ISL”) that came into force on 1 January 2006. Swiss insurance companies must always maintain net assets or funds free of any encumbrances in the amount of the “solvency margin” (“Solvency I”). Swiss regulation relating to the solvency margin is similar to the European Union (“EU”) solvency margin regime (Solvency I). The law introduced risk-based capital requirements (target capital) under the Swiss Solvency Test (“SST”) since 1 January 2011, similar to the ongoing Solvency II implementation in the EU. Swiss insurers also have to maintain tied assets that secure all known and estimated liabilities of the insurance company vis-à-vis the insureds arising out of insurance contracts. The law requires Swiss supervised insurance companies and groups to maintain a risk management system appropriate to its business activities and to establish effective internal control systems. It also requires every Swiss insurance company to designate an appointed actuary who has to provide certain reports to management. The law further introduces rules regarding the supervision of insurance groups and insurance conglomerates. These include the requirement to calculate a group solvency margin as well as a group risk based capital based on an internal model. The reporting of intra-group transactions is also required. Under the group supervision rules and based on a FINMA decree of 28 December 2011 the Zurich Insurance Group qualifies as an insurance group. The different insurance and financial services subsidiaries of the Zurich Insurance Group are supervised by their relevant local regulators and may be subject to regulatory restrictions on the amount of dividends, cash loans and advances which can be remitted to ZIC or ZIG respectively.
LEGAL PROCEEDINGS AND REGULATORY INVESTIGATIONS
The Zurich Insurance Group is continuously involved in legal proceedings, and regulatory investigations arising, for the most part, in the ordinary course of its business operations. These liabilities are taken into account in setting reserves. The Zurich Insurance
Group’s business is subject to extensive supervision, and is in regular contact with various regulatory authorities. Specifically,
certain companies within the Zurich Insurance Group are engaged in the following legal proceedings:
Fuller-Austin Litigation
An action entitled Fuller-Austin Asbestos Settlement Trust, et al. v. Zurich American Insurance Company (ZAIC), et al., was filed
in May 2004 in the Superior Court for San Francisco County, California. Three other similar actions were filed in 2004 and 2005
and have been coordinated with the Fuller-Austin action (collectively, the Fuller-Austin Case). In addition to ZAIC and four of its
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insurance company subsidiaries, ZIC and Orange Stone Reinsurance Dublin (Orange Stone) are named as defendants. The
plaintiffs, who are historical policyholders of the Home Insurance Company (Home), plead claims for, inter alia, fraudulent
transfer, tortious interference, unfair business practices, alter ego and agency liability relating to the recapitalisation of Home,
which occurred in 1995 following regulatory review and approval. The plaintiffs allege that pursuant to the recapitalisation and subsequent transactions, various Zurich entities took assets of Home without giving adequate consideration in return, and contend
that this forced Home into liquidation.
The plaintiffs further allege that the defendants should be held responsible for Home’s alleged obligations under their Home
policies. The trial judge designated the plaintiffs’ claims for constructive fraudulent transfer for adjudication before all other
claims; he subsequently ordered an initial bench trial on certain threshold elements of those fraudulent transfer claims and on
certain of defendants’ affirmative defenses. The trial commenced on 1 November 2010. Closing arguments were heard on 22 and
23 February 2012.
The court issued a tentative decision on the initial bench trial on 7 November 2013, following which the parties had an
opportunity to submit proposed corrections to nonsubstantive matters. The court issued its final decision on 27 December 2013. While the court found that plaintiffs had established that Home transferred certain assets to one of the defendants in connection
with the 1995 recapitalisation transaction, it held that plaintiffs’ fraudulent transfer claims, which all related to transfers allegedly
made as part of the 1995 recapitalisation, were time-barred. The court further held that Home’s liquidator had exclusive standing
to bring fraudulent transfer claims involving Home’s assets. The effect of these holdings should be the dismissal of the plaintiffs’
fraudulent transfer claims. In addition, the court accepted the defendants’ arguments that the findings made by the regulators in
approving the recapitalisation transaction are binding on the plaintiffs in the Fuller-Austin Case.
On 6 March 2014, the court held a hearing to consider the effect of the initial decision on the plaintiffs' remaining claims. The
Court has asked the parties to submit proposed statements of decision, after which the Court will issue a decision. On 6 March
2014, the court held a hearing to consider the effect of the initial decision on the plaintiffs' remaining claims. The Court has asked
the parties to submit proposed statements of decision, after which the Court will issue a decision. The Zurich Insurance Group
maintains that the Fuller-Austin Case is without merit and intends to continue to defend itself vigorously.
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ZURICH FINANCE (LUXEMBOURG) S.A.
Zurich Finance (Luxembourg) S.A. was incorporated on 19 May 1999, and operates under the Luxembourg law dated 10 August
1915 concerning commercial companies, as amended, as a public limited liability company (société anonyme). It is registered with
the Luxembourg trade and companies register under number B.69.748. The registered office of ZF (Luxembourg) is at 26,
Boulevard Royal, L-2449 Luxembourg and its telephone number is +352 22 99 99 5735. ZF (Luxembourg) has no subsidiaries.
ZF (Luxembourg) is a wholly owned subsidiary of ZIC. The subscribed and fully paid up capital of ZF (Luxembourg) is EUR
2,050,800 divided into 20,508 ordinary shares in registered form, each with a par value of EUR 100. ZF (Luxembourg) is a group
financing company and it is not engaged in and does not propose to engage in any activity other than issuing the Notes and entering into other financing transactions.
In general, ZF (Luxembourg) may take any controlling and supervisory measures and carry out any operation or transaction which
it considers necessary or useful in the accomplishment and development of its corporate purposes.
The corporate objects of ZF (Luxembourg) are primarily to raise finance for members of the ZIC Group.
The members of the Board of Directors of ZF (Luxembourg) are:
Name Function Business Address
Olga Kosters ............................................................................ Director Mythenquai 2, 8002 Zurich, Switzerland
Xavier Groffils ........................................................................ Director 26, Boulevard Royal, L-2449 Luxembourg
Ann Marie Callanan................................................................ Director
Ardleigh, Two Mile Borris, Thurles CO.
Tipperary Ireland
James Doyle ........................................................................... Director Building Excio, 37, rue du Puits Romain
L-8070 Bertrange
Luxembourg
As of the date of this Base Prospectus, no member of the Board of Directors of ZF (Luxembourg) has any conflicts of interests
between his duties to ZF (Luxembourg) and his private interests and other duties. If a potential conflict arises in the future, it would be subject to the provisions in the articles of association relating to proceedings at meetings of the Board of Directors.
The fiscal year of ZF (Luxembourg) begins on 1 January and terminates on 31 December of each year.
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ZURICH FINANCE (UK) PLC
Zurich Finance (UK) plc is a wholly owned subsidiary of ZFS (UKISA) Limited which in turn is a subsidiary of ZIC. It operates
and was incorporated and registered in England and Wales on 18 June 2002 under the Companies Act 1985 as a public limited
company with company number 4463547. The registered office of ZF (UK) is The Grange, Bishops Cleeve, Cheltenham, Gloucestershire, GL52 8XX and its telephone number is +44 (0)1793 511227. ZF (UK) has no subsidiaries. ZF (UK) is a group
financing company and does not propose to engage in any activity other than issuing the Notes and entering into other financing
transactions.
ZF (UK)’s authorised share capital is GBP 50,000,000, divided into 50,000,000 ordinary shares of GBP 1.00 each. The issued and
fully paid up capital of ZF (UK) is GBP 50,000 divided into 50,000 shares of GBP 1.00 each.
The primary purpose of ZF (UK) is to raise capital to finance the operations of members of the Zurich Insurance Group
The members of the Board of Directors of ZF (UK) are:
Name Function Business Address
Christian Carl ................................................................Executive Director and Chairman Mythenquai 2, 8002 Zurich, Switzerland
Vince Rennie ................................................................Executive Director Tricentre One, New Bridge Square, Swindon, SN1
1HN
Neil Evans ................................................................Executive Director Tricentre One, New Bridge Square, Swindon, SN1
1HN
As at the date of this Base Prospectus, there are no potential conflicts of interests between the duties owed by any member of the
Board of Directors of ZF (UK) to ZF (UK) and his private interests or other duties. If a potential conflict arises in the future, it
would be subject to the provisions of the articles of association relating to proceedings at meetings of the Board of Directors.
The fiscal year of ZF (UK) begins on 1 January and terminates on 31 December of each year.
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FORM OF SENIOR GUARANTEE
This guarantee agreement is made on the date of issue of the relevant tranche as specified in the Schedule hereto between:
(1) ZURICH INSURANCE COMPANY LTD of Mythenquai 2, CH8002 Zurich, Switzerland, a company incorporated with limited liability under the laws of Switzerland (the “Guarantor”); and
(2) CITICORP TRUSTEE COMPANY LIMITED, of 14th Floor, Citigroup Centre, Canada Square, Canary Wharf, London E14
5LB, acting as trustee for the Noteholders and the Couponholders (each as defined below) (the “Trustee”, which expression
shall, where the context so admits, include such company and all other persons or companies for the time being the trustee or
trustees of the Trust Deed).
WHEREAS
(A) [ZURICH FINANCE (LUXEMBOURG) S.A.] [ZURICH FINANCE (UK) PLC] as issuer, may issue Euro Medium Term
Notes in an aggregate nominal amount of up to USD18,000,000,000 (or its equivalent in other currencies) pursuant to a Euro Medium Term Note Programme established by them.
(B) The Issuer of the Notes of the relevant tranche specified in the Schedule hereto (the “Issuer”) has agreed to issue the Notes
described in the Schedule hereto (the “Notes”) on the issue date specified in the Schedule hereto.
(C) The Guarantor has agreed to guarantee to the Trustee up to a specified maximum amount the obligations of the Issuer to pay
principal, interest and all other amounts payable on all outstanding Notes and under the Trust Deed (the “Senior ZIC Guarantee”) for the benefit of the Trustee, the holders of the Notes (the “Noteholders”) and the holders of the Coupons (if
any) relating thereto (the “Couponholders” and the “Coupons” respectively) (the Noteholders and the Couponholders
together the “Holders” and the Notes and the Coupons together the “Securities”).
1. GUARANTEE
(1) Senior ZIC Guarantee
The Guarantor hereby irrevocably and unconditionally undertakes in its capacity as primary obligor and not merely as a surety,
pursuant to Art. 111 of the Swiss Federal Code of Obligations, irrespective of the validity of the Securities and the Trust Deed and
waiving all rights of objection and defence arising from the Securities and the Trust Deed to pay to the Trustee, acting for the
benefit of the Holders, within seven days after the receipt by the Guarantor of the Trustee’s first written demand for payment and
the Trustee’s confirmation in writing that an amount due under the Securities or the Trust Deed which is equivalent to the amount
claimed under the Senior ZIC Guarantee has remained unpaid on the due date (the last day of such period of seven days being
hereinafter referred to as the “Seventh Day”), such amount upon the following terms:
(a) the Senior ZIC Guarantee constitutes a direct, non-accessory, unconditional, unsubordinated and unsecured obligation of the
Guarantor ranking (subject as aforesaid) pari passu with all its other outstanding unsecured and unsubordinated obligations,
present and future, save for statutorily preferred exceptions, but in the event of insolvency, only to the extent permitted by
applicable laws relating to creditors’ rights;
(b) the maximum liability of the Guarantor under the Senior ZIC Guarantee (including, in particular, all amounts payable under
Clause 3 of the Senior ZIC Guarantee and all other amounts payable under the Senior ZIC Guarantee) shall not exceed in
aggregate [insert currency and amount] (the “Guarantee Amount”) calculated in accordance with Note 1 which may not be
reduced for so long as any sum remains payable under the Securities;
(c) all rights arising from the Senior ZIC Guarantee shall be held exclusively by the Trustee and no Holder may proceed directly
against the Guarantor under the Senior ZIC Guarantee unless the Trustee having been so requested in writing by the Holders of not less than 25 per cent in nominal amount of the Notes then outstanding or so directed by an Extraordinary Resolution
(as defined in the Trust Deed) of the Holders to proceed, fails to do so within a reasonable period and such failure is
continuing; and
(d) the Guarantor agrees that any payments to be made by it hereunder shall be made to or to the order of the Trustee in the
place of payment specified in the Schedule hereto in the currency specified in the Schedule hereto in immediately available
funds before close of business in that city on the Seventh Day and any such payment shall, to that extent, satisfy the
obligation of the Guarantor under the Senior ZIC Guarantee.
Such written demand shall, however, not be submitted to the Guarantor before seven days have passed since the due date on
which such amount due under the Securities or the Trust Deed should have been paid.
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(2) Guarantor’s Obligations Continuing
Subject to Clause 1(1)(b), the Guarantor’s obligations under the Senior ZIC Guarantee are and will remain in full force and effect
by way of continuing security until no sum remains payable under the Securities. Furthermore, the obligations of the Guarantor hereunder are additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any
person, whether from the Guarantor or otherwise, and may be enforced without first having recourse to the Issuer, any other
person, any security or any other guarantee or indemnity.
(3) Exercise of Guarantor’s Rights
So long as any sum remains payable by the Issuer under the Securities, no right of the Guarantor, by reason of the performance of
any of its obligations under the Senior ZIC Guarantee, to be indemnified by the Issuer or to take the benefit of or enforce any
security or other guarantee or indemnity shall be exercised or enforced. Until all amounts which may be or become payable in
respect of the Securities have been irrevocably paid in full, the Guarantor shall not by virtue of the Senior ZIC Guarantee be
subrogated to any rights of the Trustee or any Holder or claim in competition with the Trustee or the Holders against the Issuer.
(4) Avoidance of Payments
Any settlement or discharge between the Guarantor and the Trustee in respect of the Senior ZIC Guarantee shall be conditional
upon no payment to the Trustee or any Holder by the Issuer or any person on the Issuer’s behalf being avoided or reduced by
virtue of any provision or enactment relating to bankruptcy, insolvency or liquidation or similar laws of general application for the
time being in force and, in the event of any such payment being so avoided or reduced, the Trustee shall be entitled to recover
from the Guarantor the amount by which such payment is so avoided or reduced as if such settlement or discharge had not
occurred.
2. ACCEPTANCE The Trustee accepts the Senior ZIC Guarantee in its capacity as trustee for the Holders. The Guarantor agrees to be bound by the
provisions of Condition 7 (subject to Clause 1(1)(b)) of the Terms and Conditions of the Senior Notes, Dated Subordinated Notes
and Undated Subordinated Notes as if set out in full in this guarantee agreement.
3. CURRENCY INDEMNITY
(1) Currency of Account and Payment
The currency of the Notes (the “Contractual Currency”) is the sole currency of account and payment for all sums payable by the
Guarantor under or in connection with the Senior ZIC Guarantee, including damages.
(2) Extent of Discharge
Any amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement
of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Guarantor or otherwise), by the
Trustee in respect of any sum expressed to be due to it from the Guarantor will only discharge the Guarantor to the extent of the
Contractual Currency amount which the recipient is able to purchase with the amount so received or recovered in that other
currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that day, on the first date on
which it is practicable to do so).
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(3) Indemnity
If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under the
Senior ZIC Guarantee, the Guarantor will, subject to Clause 1(1)(b), indemnify the recipient against any loss sustained by it as a result and will indemnify it against the cost of making any such purchase.
(4) Indemnity separate
This indemnity constitutes a separate and independent obligation from the other obligations in the Senior ZIC Guarantee, will give
rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by the Trustee and will
continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due
under the Senior ZIC Guarantee or any judgment or order, subject always to Clause 1(1)(b).
4. NOTICES Each notice or demand under the Senior ZIC Guarantee shall be made in writing. Each notice or demand to be made or sent to the
Guarantor under the Senior ZIC Guarantee shall be made or sent (airmail, postage prepaid, if sent by post to another country) to
the Guarantor at the address, and for the attention of the person, from time to time designated by the Guarantor for the purposes of
the Senior ZIC Guarantee. Any such notice or demand shall be effective when actually delivered to such address. The address,
attention and telefax number of the Guarantor for notices or demands under the Senior ZIC Guarantee for the time being are as
follows:
Zurich Insurance Company Ltd
Mythenquai 2
CH8002 Zurich Fax: +41 (0)44 625 3497
Attention: Yannick Hausmann, Group General Counsel
With a copy to: Fax: +41 (0)44 625 48 31 Attention: Head of Group Treasury and Capital Management
5. RIGHT OF PRODUCTION
A copy of the Senior ZIC Guarantee will be deposited with each of the paying agents appointed under the Agency Agreement.
The Guarantor hereby acknowledges the right of each Holder to production of a copy of the Senior ZIC Guarantee.
6. GOVERNING LAW AND JURISDICTION
(1) Governing Law The Senior ZIC Guarantee shall be governed by, and construed in accordance with, the substantive laws of Switzerland.
(2) Jurisdiction
Any dispute arising out of the Senior ZIC Guarantee between the Guarantor and the Trustee, or between the Guarantor and a
Holder who is entitled to proceed against the Guarantor pursuant to Clause 1(1)(c), shall fall exclusively within the jurisdiction of
the courts of the City of Zurich, venue Zurich 1, with the right of appeal, where the law permits, to the Swiss Federal Court of
Justice in Lausanne, the decision of which shall be final.
This guarantee agreement has been entered into on the date stated at the beginning.
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ZURICH INSURANCE COMPANY LTD
By: By:
CITICORP TRUSTEE COMPANY LIMITED
By: By:
Note 1:
* The Guarantee Amount in respect of a relevant tranche of Notes (other than Variable Notes (as defined below)) will be
calculated as follows:
For Fixed Rate Notes: For Floating Rate Notes: For Zero Coupon Notes:
GA = RA + (3 × I) + AA GA = RA + (3 × EI) + AA GA = RA + AA
where:
“GA” means Guarantee Amount;
“RA” means the greater of the Early Redemption Amount and the Final Redemption Amount of the Notes, each as defined in
the applicable Final Terms;
“I” means the amount of interest payable on the Notes up to the first anniversary of their issue date;
“EI” means the estimated amount of interest payable on the Notes up to the first anniversary of their issue date calculated on
the basis that interest is payable for each interest period ending on or prior to such first anniversary at 1.5 times the rate
fixed for the first interest period; and
“AA” means USD100,000 (or its equivalent in the currency of the Guarantee Amount) representing an additional amount to
guarantee the payments of the Issuer to be due under the Trust Deed but not under the Securities.
For Notes with a variable or partial redemption amount or for Notes (other than Floating Rate Notes) where the amount of interest
is not determinable at the Issue Date (“Variable Notes”), the Guarantee Amount will be signed between the Guarantor and the relevant Dealer on or before the Issue Date.
[Final Terms annexed]
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THE SCHEDULE
Issuer: ..................................................................... [Zurich Finance (Luxembourg) S.A.] [Zurich Finance (UK) plc]
Title of Notes being issued: .................................. [ � ]
Date of issue of relevant Tranche:........................ [ � ]
Guarantee Amount ................................................ [ � ]
Place of payment and specified currency for
the purposes of Clause 1(d): ............................... [ � ]
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FORM OF SUBORDINATED GUARANTEE
This subordinated guarantee agreement is made on the date of issue of the relevant tranche as specified in the Schedule hereto between: (1) ZURICH INSURANCE COMPANY LTD of Mythenquai 2, CH-8002 Zurich, Switzerland, a company incorporated with
limited liability under the laws of Switzerland (the “Guarantor”); and (2) CITICORP TRUSTEE COMPANY LIMITED, of 14th Floor, Citigroup Centre, Canada Square, Canary Wharf, London E14
5LB, acting as trustee for the Noteholders, the Receiptholders and the Couponholders (each defined below) (the “Trustee”, which expression shall, where the context so admits, include such company and all other persons or companies for the time being the trustee or trustees of the Trust Deed).
WHEREAS (A) [ZURICH FINANCE (LUXEMBOURG) S.A.] [ZURICH FINANCE (UK) plc], as issuer, may issue Euro Medium Term
Notes in an aggregate nominal amount of up to USD18,000,000,000 (or its equivalent in other currencies) pursuant to a European Medium Term Note Programme established by them.
(B) The Issuer of the Notes of the relevant tranche specified in the Schedule hereto (the “Issuer”) has agreed to issue the Notes
described in the Schedule hereto (the “Subordinated Notes”) on the issue date specified in the Schedule hereto. (C) The Guarantor has agreed to guarantee to the Trustee up to a specified maximum amount the obligations of the Issuer to pay
principal, interest and all other amounts payable on all outstanding Subordinated Notes and under the Trust Deed (the “Subordinated ZIC Guarantee”) for the benefit of the Trustee, the holders of the Subordinated Notes (the “Noteholders”) and the holders of the Coupons (if any) relating thereto (the “Couponholders” and the “Coupons” respectively) (the Noteholders and the Couponholders together the “Holders” and the Subordinated Notes and the Coupons together the “Subordinated Securities”).
1. GUARANTEE
(1) Subordinated ZIC Guarantee The Guarantor hereby irrevocably and unconditionally undertakes on a subordinated basis in its capacity as primary obligor and not merely as a surety, pursuant to Art. 111 of the Swiss Federal Code of Obligations, irrespective of the validity of the Subordinated Securities and the Trust Deed and waiving all rights of objection and defence arising from the Subordinated Securities and the Trust Deed to pay to the Trustee, acting for the benefit of the Holders, within seven days after the receipt by the Guarantor of the Trustee’s first written demand for payment and the Trustee’s confirmation in writing that an amount due under the Subordinated Securities or the Trust Deed which is equivalent to the amount claimed under the Subordinated ZIC Guarantee has remained unpaid on the due date (the last day of such period of seven days being hereinafter referred to as the “Seventh Day”), such amount upon the following terms: (a) The Subordinated ZIC Guarantee hereunder constitutes a direct, non-accessory, unconditional, subordinated and unsecured
obligation of the Guarantor.
Claims in respect of the Subordinated ZIC Guarantee will, in the event of a winding up, liquidation, dissolution, bankruptcy of or other similar proceedings against the Guarantor (such as bankruptcy (“Konkurs”) composition (“Nachlassvertrag”) and moratorium (“Stundung”)), rank (i) after the claims of any Senior Creditors (as defined below) of the Guarantor;
(ii) pari passu with any Subordinated Notes (as defined in the Trust Deed) of the Guarantor and any other subordinated obligations of the Guarantor which whether now or in the future rank or are expressed to rank pari passu with the claims of the holders of such Subordinated Notes or the beneficiaries of this Subordinated ZIC Guarantee (“Parity Obligations”, and “Parity Obligation” shall be construed accordingly); and
(iii) prior to the claims of the holders of any Capital Notes (as defined in the Trust Deed) and of all classes of issued shares in the share capital of the Guarantor.
As used above, “Senior Creditors” shall have the meaning ascribed to such term in Condition 2(c) of the Subordinated Notes.
(b) Neither the Trustee nor any Noteholder and/or Couponholder may exercise or claim any right of set-off in respect of any
amount owed to it by the Issuer and/or the Guarantor arising under or in connection with the Subordinated Notes or the
Subordinated ZIC Guarantee and the Trustee and each Noteholder, and/or Couponholder shall, by virtue of being the holder
of any of the Subordinated Notes and/or Coupons, be deemed to have waived all such rights of set-off.
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(c) The maximum liability of the Guarantor under the Subordinated ZIC Guarantee (including, in particular, all amounts payable
under Clause 3 of the Subordinated ZIC Guarantee and all other amounts payable under the Subordinated ZIC Guarantee)
shall not exceed in aggregate [insert currency and amount] (the “Guarantee Amount”), calculated in accordance with
Note 1 which may not be reduced for so long as any sum remains payable under the Subordinated Securities.
(d) All rights arising from the Subordinated ZIC Guarantee shall be held exclusively by the Trustee and no Holder may proceed
directly against the Guarantor under the Subordinated ZIC Guarantee unless the Trustee having been so requested in writing
by the Holders of not less than 25 per cent, in nominal amount of the Subordinated Notes then outstanding or so directed by
an Extraordinary Resolution (as defined in the Trust Deed) of the Holders to proceed, fails to do so within a reasonable
period and such failure is continuing.
(e) The Guarantor agrees that any payments to be made by it hereunder shall be made to or to the order of the Trustee in the
place of payment specified in the Schedule hereto in immediately available funds before close of business in that city on the
Seventh Day and any such payment shall to that extent, satisfy the obligation of the Guarantor under the Subordinated ZIC
Guarantee.
Such written demand shall, however, not be submitted to the Guarantor before 7 days have passed since the due date on
which such amount due under the Subordinated Securities or the Trust Deed should have been paid.
(2) Guarantor’s Obligations Continuing
Subject to Clause 1(1)(c), the Guarantor’s obligations under the Subordinated ZIC Guarantee are and will remain in full force and
effect by way of continuing security until no sum remains payable under the Subordinated Securities. Furthermore, the obligations
of the Guarantor hereunder are additional to, and not instead of, any security or other guarantee or indemnity at any time existing
in favour of any person, whether from the Guarantor or otherwise, and may be enforced without first having recourse to the Issuer,
any other person, any security or any other guarantee or indemnity.
(3) Exercise of Guarantor’s Rights
So long as any sum remains payable by the Issuer under the Subordinated Securities, no right of the Guarantor, by reason of the
performance of any of its obligations under the Subordinated ZIC Guarantee, to be indemnified by the Issuer or to take the benefit
of or enforce any security or other guarantee or indemnity shall be exercised or enforced. Until all amounts which may be or
become payable in respect of the Subordinated Securities have been irrevocably paid in full, the Guarantor shall not by virtue of
the Subordinated ZIC Guarantee be subrogated to any rights of the Trustee or any Holder or claim in competition with the Trustee
or the Holders against Issuer.
(4) Avoidance of Payments Any settlement or discharge between the Guarantor and the Trustee in respect of the Subordinated ZIC Guarantee shall be
conditional upon no payment to the Trustee or any Holder by the Issuer or any person on the Issuer’s behalf being avoided or
reduced by virtue of any provision or enactment relating to bankruptcy, insolvency or liquidation or similar laws or general
application for the time being in force and, in the event of any such payment being so avoided or reduced, the Trustee shall be
entitled to recover from the Guarantor the amount by which such payment is so avoided or reduced as if such settlement or
discharge had not occurred.
2. ACCEPTANCE
The Trustee accepts the Subordinated ZIC Guarantee in its capacity as trustee for the Holders. The Guarantor agrees to be bound
by the provisions of Conditions 7 (subject to Clause 1(1)(c)) of the Terms and Conditions of the Subordinated Notes as if set out
in full in this guarantee agreement.
3. CURRENCY INDEMNITY
(1) Currency of Account and Payment
The currency of the Subordinated Notes (the “Contractual Currency”) is the sole currency of account and payment for all sums
payable by the Guarantor under or in connection with the Subordinated ZIC Guarantee, including damages.
(2) Extent of Discharge
Any amount received or recovered in a currency other than the Contractual Currency (whether as a result of the enforcement of a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Guarantor or otherwise), by the Trustee in
respect of any sum expressed to be due to it from the Guarantor will only discharge the Guarantor to the extent of the Contractual
Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the
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date of that receipt or recover (or, if it is not practicable to make that purchase on that day, on the first date on which it is
practicable to do so).
(3) Indemnity
If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under the
Subordinated ZIC Guarantee, the Guarantor will, subject to Clause 1(1)(c), indemnify the recipient against any loss sustained by it
as a result and will indemnify it against the cost of making any such purchase.
(4) Indemnity separate
This indemnity constitutes a separate and independent obligation from the other obligations in the Subordinated ZIC Guarantee,
will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by the Trustee and
will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due
under the Subordinated ZIC Guarantee or any judgment or order, subject always to Clause 1(1)(c).
4. NOTICES
Each notice or demand under the Subordinated ZIC Guarantee shall be made in writing. Each notice or demand to be made or sent
to the Guarantor under the Subordinated ZIC Guarantee shall be made or sent (airmail, postage prepaid, if sent by post to another
country) to the Guarantor at the address, and for the attention of the person, from time to time designated by the Guarantor for the
purposes of the Subordinated ZIC Guarantee. Any such notice or demand shall be effective when actually delivered to such
address. The address, attention and telefax number of the Guarantor for notices or demands under the Subordinated ZIC Guarantee
for the time being are as follows:
Zurich Insurance Company Ltd
Mythenquai 2 CH-8002 Zurich Fax: +41 (0)44 625 3497
Attention: Yannick Hausmann, Group General Counsel
With a copy to: Fax: +41 (0)44 625 48 31
Attention: Head of Group Treasury and Capital Management
5. RIGHT OF PRODUCTION
A copy of the Subordinated ZIC Guarantee will be deposited by the Guarantor with each of the paying agents appointed under the
Agency Agreement. The Guarantor hereby acknowledges the right of each Holder to production of a copy of the Subordinated
ZIC Guarantee.
6. GOVERNING LAW AND JURISDICTION
(1) Governing law
The Subordinated ZIC Guarantee shall be governed by, and construed in accordance with, the substantive laws of Switzerland.
(2) Jurisdiction
Any dispute arising out of the Subordinated ZIC Guarantee between the Guarantor and the Trustee, or between the Guarantor and
a Holder who is entitled to proceed against the Guarantor pursuant to Clause 1(1)(d), shall fall exclusively within the jurisdiction
of the courts of the City of Zurich, venue Zurich 1, with the right of appeal, where the law permits, to the Swiss Federal Court of
Justice in Lausanne, the decision of which shall be final.
This guarantee agreement has been entered into on the date stated at the beginning.
ZURICH INSURANCE COMPANY LTD
By: By:
CITICORP TRUSTEE COMPANY LIMITED
By: By:
____________ Note 1: *The Guarantee Amount in respect of a relevant tranche of Subordinated Notes (other than Variable Notes (as defined
below)) will be calculated as follows:
For Fixed Rate Notes: For Floating Rate Notes: For Zero Coupon Notes:
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GA = RA + (3 × I) + AA GA = RA + (3 × EI) + AA GA = RA + AA
where:
“GA” means Guarantee Amount;
“RA” means the greater of the Early Redemption Amount and the Final Redemption Amount of the Subordinated Notes, each
as defined in the applicable Final Terms;
“I” means the amount of interest payable on the Subordinated Notes up to the first anniversary of their issue date;
“EI” means the estimated amount of interest payable on the Subordinated Notes up to the first anniversary of their issue date
calculated on the basis that interest is payable for each interest period ending on or prior to such first anniversary at 1.5
times the rate fixed for the first interest period; and
“AA” means USD100,000 (or its equivalent in the currency of the Guarantee Amount) representing an additional amount to
guarantee the payments of the Issuer to be due under the Trust Deed but not under the Securities.
For Subordinated Notes with a variable or partial redemption amount or for Subordinated Notes (other than Floating Rate Notes)
where the amount of interest is not determinable at the Issue Date (“Variable Notes”), the Guarantee Amount will be signed
between the Guarantor and the relevant Dealer on or before the Issue Date.
[Final Terms annexed]
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THE SCHEDULE
Issuer: ........................................................................ [Zurich Finance (Luxembourg) S.A.] [Zurich Finance (UK) plc]
Title of Subordinated Notes being issued: .............. [Specify details of the Notes (including whether the Notes are Dated or Undated
Subordinated Notes)]
Date of issue of relevant Tranche: ........................... [ � ]
Guarantee Amount:................................................... [ � ]
Place of payment and specified currency for the purposes of Clause 1(e): ......................................... [ � ]
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TAXATION
General The comments below are of a general nature and are not intended to be exhaustive. They assume that there will be no substitution of the Issuers and do not address the consequences of any such substitution (notwithstanding that such substitution may be
permitted by the terms and conditions of the Notes). Any Noteholders who are in doubt as to their own tax position should
consult their professional advisers.
Luxembourg Taxation
The following information is of a general nature only and is based on ZF (Luxembourg)’s understanding of certain aspects of the
laws and practice in force in Luxembourg as of the date of this Base Prospectus. It does not purport to be a comprehensive
description of all of the tax considerations that might be relevant to an investment decision. It is not intended to be, nor should it
be construed to be, legal or tax advice. It is a description of the essential material Luxembourg tax consequences with respect to
the Notes and may not include tax considerations that arise from rules of general application or that are generally assumed to be known to holders of Notes. This summary is based on the laws in force in Luxembourg on the date of this Base Prospectus and is
subject to any change in law that may take effect after such date. Prospective holders of Notes should consult their professional
advisors with respect to particular circumstances, the effects of state, local or foreign laws to which they may be subject and as to
their tax position.
Please be aware that the residence concept used under the respective headings below applies for Luxembourg income tax
assessment purposes only. Any reference in the present section to a tax, duty, levy, impost or other charge or withholding of a
similar nature refers to Luxembourg tax law and/or concepts only. Also, please note that a reference to Luxembourg income tax
encompasses corporate income tax (impôt sur le revenu des collectivités), municipal business tax (impôt commercial communal), a
solidarity surcharge (contribution au fonds pour l’emploi) and personal income tax (impôt sur le revenu). Corporate taxpayers
may further be subject to net worth tax (impôt sur la fortune), as well as other duties, levies or taxes. Corporate income tax,
municipal business tax, as well as the solidarity surcharge invariably apply to most corporate taxpayers resident of Luxembourg for tax purposes. Individual taxpayers are generally subject to personal income tax and the solidarity surcharge. Under certain
circumstances, where an individual taxpayer acts in the course of the management of a professional or business undertaking,
municipal business tax may apply as well.
(a) Luxembourg tax residency of the holders of Notes
Investors will not become resident nor be deemed to be resident in Luxembourg by reason only of the holding of the Notes, or the
execution, performance, delivery and/or enforcement of their rights thereunder.
(b) Withholding Tax (i) Resident holders of Notes
Under the Luxembourg law dated December 23, 2005 (the “Law”), a 10 per cent Luxembourg withholding tax is levied on
interest or similar income payments made by Luxembourg paying agents to or for the immediate benefit of an individual
beneficial owner who is resident in Luxembourg. This withholding tax also applies on accrued interest received upon disposal,
redemption or repurchase of the Notes. Such withholding tax will be in full discharge of income tax if the beneficial owner is an
individual acting in the course of the management of his/her private wealth.
Further, Luxembourg resident individuals who are the beneficial owners of interest payments and other similar income made by a
paying agent established outside Luxembourg in a Member State of the European Union or the European Economic Area or in a
jurisdiction having concluded an agreement with Luxembourg in connection with the Savings Directive may opt for a final 10 per
cent levy. In such case, the 10 per cent levy is calculated on the same amounts as for the payments made by Luxembourg paying agents. The option for the 10 per cent final levy must cover all interest payments made by paying agents to the beneficial owner
during the entire civil year.
(ii) Non-resident holders of Notes
Under the Luxembourg tax law currently in effect and subject to the application of the Luxembourg laws dated 21 June 2005 (the
“Laws”) implementing the Savings Directive and several agreements concluded between Luxembourg and certain dependant
territories of the European Union, there is no withholding tax on payments of interest (including accrued but unpaid interest) made
to a Luxembourg non-resident holder of Notes. There is also no Luxembourg withholding tax upon repayment of the principal, or
subject to the application of the Laws, upon redemption or exchange of the Notes.
Under the Laws, a Luxembourg based paying agent (within the meaning of the Savings Directive) is required since 1 July 2005, to
withhold tax on interest and other similar income (including reimbursement premium received at maturity) paid by it to (or under
certain circumstances, to the benefit of) an individual or a residual entity (“Residual Entity”) in the sense of article 4.2. of the
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Savings Directive (i.e. an entity without legal personality except for (1) a Finnish avoin yhtiö and kommandiittiyhtiö / öppet bolag
and kommanditbolag and (2) a Swedish handelsbolag and kommanditbolag, and whose profits are not taxed under the general
arrangements for the business taxation and that is not, or has not opted to be considered as, a UCITS recognised in accordance
with Council Directive 2009/65/EC), resident or established in another Member State of the European Union, unless the beneficiary of the interest payments elects for an exchange of information. The same regime applies to payments to individuals or
Residual Entity resident in any of the following territories: Aruba, British Virgin Islands, Curaçao, Guernsey, Isle of Man, Jersey,
Montserrat and Sint Maarten.
The withholding tax rate is currently 35 per cent. It has been publicly announced that as from 1 January 2015 the withholding tax
within the meaning of the Savings Directive will be replaced by the exchange of information.
In each case described here above (residents and non-residents), responsibility for the withholding tax will be assumed by the
Luxembourg paying agent.
(c) Taxation of the holders of Notes
(i) Taxation of Luxembourg non-residents
Holders of Notes who are non-residents of Luxembourg and who have neither a permanent establishment nor a permanent
representative in Luxembourg to which the Notes are attributable are not liable to any Luxembourg income tax, whether they
receive payments of principal or interest (including accrued but unpaid interest) or realise capital gains upon redemption,
repurchase, sale, disposal or exchange, in any form whatsoever, of any Notes.
Corporate holders of Notes who are non-residents of Luxembourg or non-resident individual holders acting in the course of the
management of a professional or business undertaking, and who have a permanent establishment or a permanent representative in
Luxembourg to which the Notes are attributable are liable to Luxembourg income tax on any interest received or accrued, as well
as any reimbursement premium received at maturity and any capital gain realised on the sale or disposal, in any form whatsoever, of the Notes and have to include this income in their taxable income for Luxembourg income tax assessment purposes.
(ii) Taxation of Luxembourg residents
Luxembourg resident individuals
An individual holder of Notes, acting in the course of the management of his/her private wealth, is subject to Luxembourg income
tax in respect of interest received, redemption premiums or issue discounts under the Notes, except if the 10 per cent withholding
tax has been levied on such payments in accordance with the Law.
Under Luxembourg domestic tax law, gains realised upon the sale or disposal, in any form whatsoever, of the Notes, which do not constitute zero coupon notes, by an individual holder of Notes, who is a resident of Luxembourg for tax purposes and who acts in
the course of the management of his/her private wealth are not subject to Luxembourg income tax, provided this sale or disposal
took place more than six months after the acquisition of the Notes. An individual holder of Notes, who acts in the course of the
management of his/her private wealth and who is a resident of Luxembourg for tax purposes, has further to include the portion of
the gain corresponding to accrued but unpaid income in respect of the Notes in his/her taxable income, insofar as the accrued but
unpaid interest is indicated separately in the agreement.
A gain realised upon a sale of zero coupon Notes before their maturity by Luxembourg resident holders of Notes acting in the
course of the management of their private wealth, must be included in their taxable income for Luxembourg income tax
assessment purposes. Taxable gains are determined as being the difference between the sale, repurchase or redemption price
(including accrued but unpaid interest) and the issue price.
Luxembourg resident individual holders of Notes acting in the course of the management of a professional or business
undertaking to which the Notes are attributable, have to include any interest received or accrued, as well as any gain realised on
the sale or disposal of the Notes, in any form whatsoever, in their taxable income for Luxembourg income tax assessment
purposes. Taxable gains are determined as being the difference between the sale, repurchase or redemption price (including
accrued but unpaid interest) and the lower of the cost or book value of the Notes sold or redeemed. A tax credit for the
withholding tax levied in accordance with the Law is generally available.
Luxembourg corporate residents
Luxembourg corporate resident holders of Notes must include any interest received or accrued, as well as any gain realised on the
sale or disposal of the Notes, in their taxable income for Luxembourg income tax assessment purposes, except if the holder of Notes is a Luxembourg corporate resident benefiting from a special tax regime (see below). Taxable gains are determined as being
the difference between the sale, repurchase or redemption price (including but unpaid interest) and the lower of the cost or book
value of the Notes sold or redeemed.
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Luxembourg corporate residents benefiting from a special tax regime
Luxembourg corporate resident holders of Notes who benefit from a special tax regime, such as, for example, undertakings for
collective investment subject to the amended law of 17 December 2010, specialised investment funds governed by the amended law of 13 February 2007 or family wealth management companies governed by the amended law of 11 May 2007 are exempt
from income taxes in Luxembourg and thus income derived from the Notes, as well as gains realised thereon, are not subject to
Luxembourg income taxes.
(d) Net Wealth Tax
Luxembourg resident holders of Notes and non-resident holders of Notes who have a permanent establishment or a permanent
representative in Luxembourg to which the Notes are attributable, are subject to Luxembourg wealth tax on such Notes, except if
the holder of Notes is (i) an individual, (ii) an undertaking for collective investment subject to the amended law of 17 December
2010, (iii) a securitisation company governed by the amended law of 22 March 2004 on securitisation, (iv) a company governed
by the amended law of 15 June 2004 on venture capital vehicles, (v) a specialised investment fund governed by the amended law of 13 February 2007 or (vi) a family wealth management company governed by the amended law of 11 May 2007.
(e) Other Taxes
There is no Luxembourg registration tax, stamp duty or any other similar tax or duty payable in Luxembourg by the holders of
Notes as a consequence of the issuance of the Notes, nor will any of these taxes be payable as a consequence of a subsequent
transfer, redemption or repurchase of the Notes (except in case of voluntary registration in Luxembourg).
No estate or inheritance taxes are levied on the transfer of the Notes upon death of a holder of Notes in cases where the deceased
was not a resident of Luxembourg for inheritance tax purposes. Gift tax may be due on a gift or donation of Notes if the gift is
recorded in a deed passed in front of a Luxembourg notary or otherwise registered in Luxembourg.
Swiss Taxation
The following is a summary of certain Swiss tax consequences of the purchase, beneficial ownership and disposition of Notes.
The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision
to purchase, own or dispose of the Notes. The summary relates only to the position of persons who are the absolute beneficial
owners of the Notes and may not apply to certain other classes of persons. The summary is based upon Swiss tax laws and tax
practice as in effect on the date of this Base Prospectus, which are subject to prospective or retroactive change. The summary does
not constitute tax or legal advice and the comments below are of a general nature only. Prospective investors in the Notes should
consult their own advisors as to the Swiss or other tax consequences of the purchase, beneficial ownership and disposition of the
Notes.
(a) Withholding Tax Payments by the Issuers (other than ZIC), or by ZIC as Guarantor (in respect of Notes issued by ZF (Luxembourg) and ZF (UK)),
of interest on, and repayment of principal of, the Notes, will not be subject to Swiss federal withholding tax, even though the
Notes are guaranteed by ZIC as Guarantor (in respect of Notes issued by ZF (Luxembourg) and ZF (UK)), provided that the
relevant Issuer uses the proceeds from the offering and sale of the Notes outstanding outside of Switzerland unless use in
Switzerland is permitted under the Swiss taxation laws in force from time to time without payments in respect of the Notes
becoming subject to withholding or deduction for Swiss withholding tax as a consequence of such use of proceeds in Switzerland.
Payments of interest on Notes issued by ZIC will be subject to Swiss federal withholding tax at a rate of 35 per cent. Certain types
of Notes issued by ZIC may classify as notes with a “predominant one-time interest payment” (Obligationen mit überwiegender Einmalverzinsung; see below “—Income Taxation on Principal or Interest”). A “one-time interest payment” will be subject to the Swiss federal withholding tax upon redemption of the Notes. Restricted Notes and Restricted Capital Notes will not be subject to
the Swiss federal withholding tax.
A holder of a Note issued by ZIC who resides in Switzerland and who, at the time the payment of interest is due, is the beneficial
recipient of the payment of interest and, in the case of a holder who is an individual, duly reports the gross payment of interest in
his or her tax return and, in the case of a holder who is a legal entity or an individual required to keep accounting books, includes
such payment as earnings in its income statement, is entitled to a full refund of or a full tax credit for the Swiss federal
withholding tax. A holder of a Note issued by ZIC who does not reside in Switzerland may be able to claim a full or partial refund
of the Swiss federal withholding tax by virtue of the provisions of an applicable double taxation treaty, if any, between
Switzerland and the country of residence of such holder.
On 24 August 2011 the Swiss Federal Council issued draft legislation, which, if enacted, may require a paying agent in
Switzerland to deduct Swiss withholding tax at a rate of 35 per cent on any payment of interest in respect of a Note (including, as
the case may be, payment by ZIC as Guarantor (in respect of Notes issued by ZF (Luxembourg) and ZF (UK)) under the
Guarantee) to an individual resident in Switzerland or to a person (not only individual) resident outside Switzerland. If this
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legislation or similar legislation were enacted and an amount of, or in respect of, Swiss withholding tax were to be deducted or
withheld from that payment, neither the Issuer nor the Guarantor nor any paying agent nor any other person would pursuant to the
Conditions be obliged to pay additional amounts with respect to any Note as a result of the deduction or imposition of such
withholding tax.
(b) Stamp Taxes The issue of Notes by the Issuers and the issue of the Guarantee by ZIC as Guarantor (in respect of Notes issued by ZF
(Luxembourg) and ZF (UK) on the relevant closing date to the initial subscribers) are not subject to Swiss federal stamp duty on
the issue of securities and Swiss federal stamp duty on the dealing in securities (primary market). Secondary market dealings in
Notes with a maturity in excess of 12 months where a Swiss domestic bank or a Swiss domestic securities dealer (as defined in the
Swiss federal stamp duty act) is a party, or acts as an intermediary, to the transaction may be subject to Swiss federal stamp duty
on dealings in securities at a rate of up to 0.15 per cent of the purchase price of the Notes in the case of Notes issued by ZIC and at
a rate of up to 0.3 per cent of such purchase price in the case of Notes issued by the other Issuers. Where both the seller and the
purchaser of the Notes (whether or not issued by ZIC) are non-residents of Switzerland or the Principality of Liechtenstein, no Swiss federal stamp duty on dealing in securities is payable. Restricted Notes are not subject to Swiss federal stamp duty on
dealings in securities.
(c) Income Taxation on Principal or Interest (i) Notes held by non-Swiss holders Payments by the Issuers, or by ZIC as Guarantor (in respect of Notes issued by ZF (Luxembourg) and ZF (UK)), of interest and
repayment of principal to, and gain realised on the sale or redemption of Notes by, a holder of Notes who is not a resident of
Switzerland and who during the current taxation year has not engaged in trade or business through a permanent establishment or a
fixed place of business in Switzerland to which such Note is attributable will not be subject to any Swiss federal, cantonal or
communal income tax (as concerns the Swiss federal withtholding tax see above "Withholding Tax").
(ii) Notes held by Swiss resident holders as private assets Notes without a “predominant one-time interest payment”: If the yield-to-maturity of a Note predominantly derives from periodic
interest payments and not from a one-time-interest-payment such as an original issue discount or a repayment premium (see below
"Notes with a predominant one-time interest payment"), then a holder who is an individual resident in Switzerland and who holds
the Note as a private asset is required to include in his or her personal income tax return for the relevant tax period any periodic
interest payments and any one-time interest payment received on the Note in such period, converted into Swiss Francs at the
exchange rate prevailing at the time of payment, as the case may be, and will be taxable on any net taxable income (including such
amounts) for the relevant tax period. A gain (which may include interest accrued) realised on the sale of such a Note is a tax-free
private capital gain, and a loss realised on the sale of such a Note a non-tax deductible private capital loss.
Notes with a “predominant one-time interest payment”: If the yield-to-maturity of a Note predominantly derives from a one-time-
interest-payment such as an original issue discount or a repayment premium and not from periodic interest payments, then a
holder who is an individual resident in Switzerland and holds the Note as a private asset, is required to include in his or her
personal income tax return for the relevant tax period any periodic interest payments received on the Note and, in addition, any
amount equal to the difference between the value of the Note at redemption or sale, as applicable, and its value at issuance or
secondary market purchase, as applicable, and converted into Swiss Francs at the exchange rate prevailing at the time of sale or
redemption, issuance or purchase, respectively, and will be taxable on any net taxable income (including such amounts) for the
relevant tax period. Any value decreases realised on such Note on sale or redemption may be offset by such a holder against any
gains (including periodic interest payments) realised by him or her within the same taxation period from other securities with a
predominant one-time interest payment.
See “Notes held as Swiss business assets” below for a summary on the tax treatment of individuals classified as “professional
securities dealers.”
(iii) Notes held as Swiss business assets Individuals who hold Notes as part of a business in Switzerland and Swiss-resident corporate taxpayers and corporate taxpayers
residing abroad holding Notes as part of a Swiss permanent establishment or fixed place of business in Switzerland, are required
to recognise the payments of interest and any capital gain or loss realised on the sale or other disposition of such Notes in their
income statement for the respective tax period and will be taxable on any net taxable earnings for such period. The same taxation
treatment also applies to Swiss-resident individuals who, for income tax purposes, are classified as “professional securities
dealers” for reasons of, inter alia, frequent dealings and leveraged transactions in securities.
(d) Final Foreign Withholding Taxes
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On 1 January 2013, treaties on final withholding taxes of Switzerland with the United Kingdom and Austria entered into force
(each a “Contracting State”). The treaties require a Swiss paying agent, as defined in the treaties, to levy a flat-rate final
withholding tax (Abgeltungssteuer) at rates specified in the treaties on certain capital gains and income items (interest, dividends,
other income items, all as defined in the treaties, deriving from assets, including the Notes and the Gurantee, as applicable, held in accounts or deposits with a Swiss paying agent by (i) an individual resident in a Contracting State or, (ii) if certain requirements
are met, by a domiciliary company (Sitzgesellschaft), an insurance company in connection with a so-called insurance wrapper
(Lebensversicherungsmantel) or other individuals if the beneficial owner is an individual resident in a Contracting State. The flat-
rate tax withheld substitutes the ordinary income tax on the respective capital gains and income items, in the Contracting State
where the individual is tax resident. In order to avoid the withholding of the flat-rate tax by the Swiss paying agent, such
individuals may opt for a disclosure of the respective capital gains and income items to the tax authorities of the Contracting State
where they are tax residents. Switzerland may conclude similar treaties with other European countries.
United Kingdom Taxation
The following is a summary of the United Kingdom withholding taxation treatment and reporting obligations based on UK law as applied in England and Wales and HM Revenue & Customs published practice at the date hereof in relation to payments of
interest in respect of the Notes. The comments do not deal with other United Kingdom tax aspects of acquiring, holding or
disposing of Notes (and for the avoidance of doubt do not include consideration of direct taxation of income on which tax may or
may not be withheld). The comments are made on the assumption that neither ZF (Luxembourg) nor ZIC is resident in the United
Kingdom for United Kingdom tax purposes, is issuing the Notes for the purposes of or in the course of a trade or other business
carried on by it in the United Kingdom or pays interest on the Notes which has a United Kingdom source. The comments relate
only to the position of persons who are absolute beneficial owners of the Notes (and may not apply to certain classes of
Noteholders (such as dealers and persons who are connected or associated with the Issuer for relevant tax purposes)). Prospective
Noteholders should be aware that the particular terms of issue of any series of Notes as specified in the relevant Final Terms may
affect the tax treatment of that series and other Tranches of Notes. The following is a general guide and should be treated with
appropriate caution. Noteholders who are in any doubt as to their tax position should consult their professional advisers.
Noteholders who may be liable to taxation in jurisdictions other than the United Kingdom in respect of their acquisition, holding or disposal of the Notes are particularly advised to consult their professional advisers as to whether they are so liable (and if so
under the laws of which jurisdictions), since the following comments relate only to certain United Kingdom taxation aspects of
payments in respect of the Notes. In particular, Noteholders should be aware that they may be liable to taxation under the laws of
other jurisdictions in relation to payments in respect of the Notes even if such payments may be made without withholding or
deduction for or on account of taxation under the laws of the United Kingdom.
(a) Interest on the Notes issued by ZF (UK)
The Notes issued by ZF (UK) which carry a right to interest will constitute “quoted Eurobonds” within the meaning of section 987
of the UK Income Tax Act 2007 (the “Act”) as long as they are and continue to be listed on a “recognised stock exchange” within
the meaning of section 1005 of the Act. Securities will be treated as listed on a recognised stock exchange if (and only if) they are admitted to trading on that exchange (the regulated market of the Luxembourg Stock Exchange is a recognised stock exchange for
these purposes) and either they are included in the United Kingdom Official List (within the meaning of Part 6 of the Financial
Services and Markets Act 2000) or they are officially listed, in accordance with provisions corresponding to those generally
applicable in European Economic Area states, in a country outside the United Kingdom in which there is a recognised stock
exchange.
Accordingly, payments of interest on such Notes issued by ZF (UK) may be made without withholding for or on account of UK
income tax provided such Notes are and remain so listed and admitted to trading at the time of payment.
In all other cases, interest on the Notes issued by ZF (UK) may fall to be paid under deduction of United Kingdom income tax at
the basic rate, which is currently 20 per cent, subject to such relief as may be available under an applicable double taxation treaty
or to any other exemption which may apply. However, this withholding will not apply if the relevant interest is paid on Notes issued by ZF (UK) with a maturity date of less than one year from the date of issue and which are not issued with the intention, or
under schemes or arrangements the effect of which is, to render such Notes part of a borrowing with a total term of a year or more.
(b) Payments by the Guarantor
If any payments are made pursuant to a Senior ZIC Guarantee or a Subordinated ZIC Guarantee in respect of interest on Notes
issued by ZF (UK) (or other amounts due under such Notes other than the repayment of amounts subscribed for the Notes) such
payments may be subject to United Kingdom withholding tax at the basic rate, which is currently 20 per cent, subject to the
availability of relief under the provisions of any applicable double taxation treaty or to any other exemption which may apply
(although such payments may not be eligible for the exemptions described in paragraph (a) above).
(c) Provision of information
Noteholders should note that HM Revenue and Customs has powers to obtain information relating to securities in certain
circumstances. This may include details of the beneficial owners of the Notes (or the persons for whom the Notes are held), details
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of the persons to whom payments derived from the Notes are or may be paid and information and documents in connection with
transactions relating to the Notes. Information may be required to be provided by, amongst others, the holders of the Notes,
persons by (or via) whom payments derived from the Notes are made or who receive (or would be entitled to receive) such
payments, persons who effect or are a party to transactions relating to the Notes on behalf of others and certain registrars or administrators. These provisions will apply whether or not the interest has been paid subject to withholding or deduction for or on
account of United Kingdom income tax and whether or not the Noteholder is resident in the United Kingdom for United Kingdom
taxation purposes. In certain circumstances, the details provided to HM Revenue and Customs may be passed by HM Revenue
and Customs to the tax authorities of certain other jurisdictions.
(d) Other rules relating to United Kingdom withholding tax
Notes issued by ZF (UK) may be issued at an issue price of less than 100 per cent of their principal amount. Any discount element
on any such Notes should not be subject to any United Kingdom withholding tax pursuant to the provisions mentioned in
(a) above, but may be subject to reporting requirements as outlined in (c) above and in “EU Savings Directive disclosure” below.
Where Notes issued by ZF (UK) are to be, or may fall to be, redeemed at a premium, as opposed to being issued at a discount,
then any such element of premium may constitute a payment of interest. Payments of interest are subject to United Kingdom
withholding tax, and to reporting requirements as outlined in (c) above and in “EU Savings Directive disclosure” below.
The references to “interest” in this United Kingdom Taxation section above mean “interest” as understood in United Kingdom tax
law. Such statements do not take any account of any different definitions of “interest” or “principal” which may prevail under any
other law or which may be created by the terms and conditions of the Notes or any related documentation (e.g. see Condition 5(d)
of the Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes).
The above description of the United Kingdom withholding tax position assumes that there will be no substitution of an issuer
pursuant to Condition 14 of the Notes or otherwise and does not consider the tax consequences of any such substitution.
Where interest has been paid under deduction of United Kingdom income tax, Noteholders who are not resident in the United
Kingdom may be able to recover all or part of the tax deducted if there is an appropriate provision in any applicable double
taxation treaty and the relevant Noteholder successfully completes a claim for recovery of tax deducted under such double
taxation treaty.
EU Savings Directive disclosure
Under the EU Savings Directive on taxation of savings income, each EU Member State is required to provide to the tax authorities
of another EU Member State details of payments of interest or other similar income paid by a person established within its
jurisdiction to, or secured by such a person for the benefit of, an individual resident or certain limited types of entity established in
that other EU Member State. However, for a transitional period, Austria and Luxembourg are instead required (unless during such period they elect otherwise) to apply a withholding system in relation to such payments, deducting tax at the rate of 35 per cent
pursuant to the EU Savings Directive or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-
27 November 2000 on the taxation of savings income or any law implementing or complying with, or, introduced in order to
conform to, such Directive. The transitional period is to terminate at the end of the first full fiscal year following agreement by
certain non EU countries to the exchange of information relating to such payments.
Also a number of non-EU countries, including Switzerland, and certain dependent or associated territories of certain EU Member
States, have adopted similar measures to the EU Savings Directive (either provision of information or transitional withholding and
in the case of Switzerland, a withholding system with the option of the individual to have the paying agent and Switzerland
provide to the tax authorities of the EU Member State the details of the interest payments in lieu of the withholding) in relation to
payments made by a person established within its jurisdiction to, or secured by such a person for the benefit of, an individual
resident or certain limited types of entity established in an EU Member State. In addition, the Member States have entered into provision of information or transitional withholding arrangements with certain of those dependent or associated territories in
relation to payments made by a person in an EU Member State to, or secured by such a person for the benefit of, an individual
resident or certain limited types of entity established in one of those territories.
The attention of Noteholders is drawn to Condition 7 of the Terms and Conditions of the Notes.
The European Council formally adopted a Council Directive amending the EU Savings Directive on 24 March 2014 (the
"Amending Directive"). The Amending Directive amends and broadens the scope of the requirements described above. EU
Member States have until 1 January 2016 to adopt the national legislation necessary to comply with the Amending Directive,
which legislation must apply from 1 January 2017. The changes made under the Amending Directive include expanding the range
of payments covered by the EU Savings Directive and extending the scope of the EU Savings Directive to payments made to, or secured for the benefit of, certain other entities and legal arrangements. Luxembourg confirmed that they will endorse the
amendment to the EU Savings Directive and will provide the required information on interest payments (or similar income) to the
tax authorities of other EU Member States under the automatic information exchange as of 1 January 2015 and will abolish the
withholding system.
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Switzerland and the European Commission have commenced negotiations on certain amendments to the agreement between the
European Community and the Confederation of Switzerland dated as of 26 October 2004 providing for measures equivalent to
those laid down in the EU Savings Directive, which may, if implemented, amend or broaden the scope of the requirements discussed above.
Investors should inform themselves of, and where appropriate take advice on, the impact of the EU Savings Directive, as
amended, on their investment.
The proposed FTT The European Commission has published a proposal for a Directive for a common FTT in Belgium, Germany, Estonia, Greece,
Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “participating Member States”).
The proposed FTT has very broad scope and could, if introduced in its current form, apply to certain dealings in financial instruments (including secondary market transactions) in certain circumstances. Primary market transactions referred to in Article
5(c) of Regulation (EC) No 1287/2006 are exempt.
Under the current European Commission proposal, the FTT could apply in certain circumstances to persons both within and
outside of the participating Member States. Generally, it would apply to certain dealings in financial instruments where at least
one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may
be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (i) by
transacting with a person established in a participating Member State or (ii) where the financial instrument which is subject to the
dealings is issued in a participating Member State.
The FTT proposal remains subject to negotiation between the participating Member States. It may therefore be altered prior to
any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate. Prospective holders of Notes are advised to seek their own professional advice in relation to the FTT.
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SUBSCRIPTION AND SALE
The Dealers have in an amended and restated dealer agreement (as further amended or supplemented from time to time, the
“Dealer Agreement”) dated 19 May 2014 agreed with the Issuers as the basis upon which they or any of them may from time to
time agree to subscribe for Notes. Any such agreement will extend to those matters stated under “Form of the Notes and the Capital Notes”, “Terms and Conditions of the Senior Notes, Dated Subordinated Notes and Undated Subordinated Notes” and
“Terms and Conditions of the Capital Notes” above. In the Dealer Agreement, the Issuers have agreed to reimburse the Dealers
for certain of their expenses in connection with the establishment of the Programme and the issue of Notes under the Programme.
United States
The Notes have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any
state or other jurisdiction of the United States, and may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act) except in accordance with Regulation S under
the U.S. Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
U.S. Securities Act.
Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or
its possessions or to U.S. persons, except in certain transactions permitted by U.S. tax regulations. Terms used in the preceding
sentence have the meanings given to them by the United States Internal Revenue Code of 1986 and regulations thereunder. The
applicable Final Terms will identify whether TEFRA C rules or TEFRA D rules apply or whether TEFRA is not applicable.
Each Dealer has represented and agreed that it will offer, sell and deliver Notes (i) as part of their distribution at any time and
(ii) otherwise until forty days after the completion of the distribution of all Reg. S Notes of the Tranche of which such Notes are a
part, as determined and certified to the Agent or the Issuer by the Relevant Dealer (or, in the case of a sale of a series of Notes to
or through more than one Dealer, by each of such Dealers as to the Notes of such Series purchased by or through it or, in the case
of a syndicated issue, the relevant Lead Manager, in which case the Agent or the Issuer shall notify each such Dealer when all
such Dealers have, or the Lead Manager has, so certified), only outside the United States to non-U.S. persons in accordance with Rules 903 and 904 of Regulation S under the U.S. Securities Act. Accordingly, each Dealer has represented and agreed that
neither it, nor its affiliates nor any person acting on its or their behalf has engaged or will engage in any directed selling efforts (as
defined in Rule 902 of Regulation S) with respect to the Notes, and that it and they have complied and will comply with the
offering restrictions of Regulation S. Each Dealer has also agreed that, at or prior to confirmation of sale of the Notes, it will have
sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Reg. S Notes
from it or through it during the distribution compliance period a confirmation or notice setting forth the restrictions on offers and
sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in the above paragraph
have the meanings given to them by Regulation S.
The Notes are being offered and sold only outside the United States to persons other than U.S. persons (“foreign purchasers”, which term includes dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners, other than an estate or trust) in reliance upon Regulation S. As used in this discussion of “Subscription and
Sale” — “United States”, the terms “Offshore transaction”, “United States” and “U.S. person” have the meanings given to
them in Regulation S.
Each purchaser of Notes will be deemed to have represented and agreed as follows:
(1) It is purchasing the Notes for its own account or an account with respect to which it exercises sole investment discretion and
that it and any such account is a foreign purchaser that is outside the United States (or a foreign purchaser that is a dealer or other
fiduciary as referred to above).
(2) It acknowledges that the Notes have not been registered under the U.S. Securities Act and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons except as set forth below.
(3) It agrees that the Issuer has no obligation to register the Notes under the U.S. Securities Act.
(4) It will not resell or otherwise transfer any Notes within two years after the original issuance of the Notes except (A) to the
Issuer or any subsidiary of the Issuer, (B) outside the United States in an Offshore transaction in compliance with Rule 904 under
the U.S. Securities Act, (C) pursuant to the exemption from registration provided by Rule 144 under the U.S. Securities Act (if
available) or (D) pursuant to an effective registration statement under the U.S. Securities Act.
(5) It will give to each person to whom it transfers Notes notice of any restrictions on transfer of those Notes.
(6) It understands that the Reg. S Notes offered will be represented by a Reg. S Global Note. Before any interest in a Reg. S. Global Note may be offered, sold, pledged or otherwise transferred to a person who is not a foreign purchaser, the transferee will
be required to provide the Trustee with a written certification (the form of which certification can be obtained from the Trustee) as
to compliance with the transfer restrictions referred to above.
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(7) It understands that each of the Reg. S Notes will bear a legend substantially to the following effect unless otherwise agreed by
the Issuer and the holder of particular Notes:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OF BENEFIT OF, U.S. PERSONS. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE U.S. SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS SECURITY AND THE LAST DATE ON WHICH THE ISSUER OF THIS SECURITY OR ANY AFFILIATED
PERSON OF THE ISSUER WAS THE OWNER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY OF THE ISSUER, (B) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE U.S.
SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE U.S. SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED IN THIS STATEMENT,
THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE U.S. SECURITIES ACT.
(8) It will not sell or otherwise transfer Notes to, and each purchaser represents and covenants that it is not acquiring the Notes for
or on behalf of, and will not transfer Notes to, any “employee benefit plan” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 (“ERISA”) which is subject to Title I of ERISA or any “plan” as defined in Section 4975 of the
Code, which is subject to Section 4975 of the Code (in such case, a “Plan”), or any entity the assets of which constitute “plan
assets” of any Plan for the purposes of ERISA or Section 4975 of the Code (a “Plan Entity”).
(9) It acknowledges that the Trustee for the Notes will not be required to accept for registration of transfer any Notes acquired by
it, except upon presentation of evidence satisfactory to the Issuer and the Trustee that the restrictions described above have been
complied with.
(10) It acknowledges that the Issuers, the Dealers and others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations and agreements and agrees that if any of the acknowledgments, representations and agreements
deemed to have been made by its purchase of Notes are no longer accurate, it will promptly notify the Issuer and the Dealers. If it
is acquiring the Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion
with respect to each such account and it has full power to make the foregoing acknowledgments, representations and agreements
on behalf of each account.
Public Offer Selling Restriction under the EU Prospectus Directive In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a
“Relevant Member State”), each Dealer has represented and agreed and each further Dealer appointed under the Programme will
be required to represent and agree that with effect from and including the date on which the Prospectus Directive is implemented
in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Notes which
are the subject of the offering contemplated by the Base Prospectus as completed by the relevant Final Terms in relation thereto to
the public in that Relevant Member State, except that it may, with effect from and including the Relevant Implementation Date,
make an offer of such Notes to the public in that Relevant Member State:
(a) at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b) at any time to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD
Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive),
subject to obtaining the prior consent of the Relevant Dealer or Dealers nominated by the Issuer for any such offer; or
(c) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive.
provided that no such offer of Notes referred to in (a) to (c) above shall require the Issuer or any Dealer to publish a prospectus
pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression “offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to
be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member
State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means
Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the
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Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression
“2010 PD Amending Directive” means Directive 2010/73/EU.
United Kingdom
Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and
agree that:
(a) No deposit-taking: in relation to any Notes which have a maturity of less than one year:
(i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of its business; and
(ii) it has not offered or sold and will not offer or sell any Notes other than to persons:
(A) whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses; or
(B) who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the
purposes of their businesses,
where the issue of the Notes would otherwise constitute a contravention of section 19 of the FSMA by the relevant Issuer;
(b) Financial promotion: it has only communicated or caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the
FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA
does not apply to the relevant Issuer or the Guarantor; and
(c) General compliance: it has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to any Notes in, from or otherwise involving the United Kingdom.
Japan
The Notes have not been and will not be registered under Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948,
as amended, the “Financial Instruments and Exchange Act”) and disclosure under the Financial Instruments and Exchange Act
has not been and will not be made with respect to the Notes. Each Dealer has agreed and each further Dealer appointed under the
Programme will be required to agree that it has not, directly or indirectly, offered, sold, resold or otherwise transferred and will
not, directly or indirectly, offer sell, resell or otherwise transfer any Notes or any interest therein, in Japan or to, or for the benefit
of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity
organised under the laws of Japan), or to others for re-offering resale or otherwise transferring, directly or indirectly, in Japan or
to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and all other applicable laws, regulations and
guidelines promulgated by the relevant Japanese governmental and regulatory authorities.
General
Each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree that it will comply with
all applicable laws and regulations in force in any country or jurisdiction in which it purchases, offers, sells or delivers Notes or
possesses or distributes any offering material in relation to such Notes and will obtain any consent, approval or permission
required by it for the subscription, offer, sale or delivery by it of Notes or possession or distribution of such offering material
under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such subscription, offer or
sale.
No Issuer nor any of the Dealers represents that Notes may at any time lawfully be sold in compliance with any applicable
registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any
responsibility for facilitating such sale.
With regard to each Tranche, the relevant Dealer will be required to comply with such other additional restrictions as the relevant
Issuer and the relevant Dealer shall agree and as shall be set out in the applicable Final Terms.
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FORM OF FINAL TERMS OF THE SENIOR NOTES, DATED SUBORDINATED NOTES AND UNDATED SUBORDINATED NOTES
Final Terms dated [●]
[Zurich Finance (Luxembourg) S.A*/ Zurich Finance (UK) plc/Zurich Insurance Company Ltd]
Issue of [Aggregate Nominal Amount of Tranche] [Title of [[Dated][Undated] Subordinated] Notes]
[Guaranteed by Zurich Insurance Company Ltd] under the USD18,000,000,000
Euro Medium Term Note Programme
Part A Contractual Terms
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Base Prospectus dated
19 May 2014 [and the supplement to the Base Prospectus dated [●]] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive (Directive 2003/71/EC) (and amendments thereto, including Directive 2010/73/EU) (the
“Prospectus Directive”). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4
of the Prospectus Directive and must be read in conjunction with such Base Prospectus [as so supplemented]. Full information on
the Issuer[, the Guarantor] and the offer of the Notes is only available on the basis of the combination of these Final Terms and the
Base Prospectus [as so supplemented]. [The Base Prospectus [, the supplement to the Base Prospectus, the Final Terms] [are]
available for viewing on the website of the Luxembourg Stock Exchange www.bourse.lu and at [website] [and] during normal
business hours at [address] [and copies may be obtained from [address].]
The following alternative language applies if the first tranche of an issue which is being increased was issued under a Base Prospectus with an earlier date.
[Terms used herein shall be deemed to be defined as such for the purposes of the Conditions contained in the Trust Deed dated [original date] and set forth in the Base Prospectus dated [original date] [and the supplement to the Base Prospectus dated [●]] (the
Conditions). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the
Prospectus Directive (Directive 2003/71/EC) (and amendments thereto, including Directive 2010/73/EU) (the “Prospectus
Directive”) and must be read in conjunction with the Base Prospectus dated [current date] [and the supplement to the Base
Prospectus dated [●]], which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive. Full
information on the Issuer [, the Guarantor] and the offer of the Notes is only available on the basis of the combination of these
Final Terms and the Base Prospectuses dated [original date] and [current date] [and the supplements to the Base Prospectus dated
[●] and [●]]. [The Base Prospectuses [, the supplements to the Base Prospectus, the Final Terms] are available for viewing on the
website of the Luxembourg Stock Exchange www.bourse.lu and at [website] [and] during normal business hours at [address] [and
copies may be obtained from [address].]
[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote guidance for completing the Final Terms.]
____________
(* Include where ZF (Luxembourg) is the Issuer: société anonyme 26, Boulevard Royal, L-2449 Luxembourg, RCS number B 69748)
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1. [(i)] [Guarantor (not applicable to Notes issued by Zurich Insurance Company Ltd):
Zurich Insurance Company Ltd]
2. [(i)] Series Number: [ ]
[(ii) Tranche Number: [ ]]
[(iii) Date on which the Notes will be consolidated and form a single Series:
The Notes will be consolidated and form a single Series with [identify earlier Tranches] on [the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph 24 below, which is expected to occur on or about [date]]
3. Specified Currency or Currencies: [ ]
4. Aggregate Nominal Amount of Notes admitted to trading: [ ]
[(i)] Series: [ ]
[(ii) Tranche: [ ]
5. Issue Price: [ ] per cent of the Aggregate Nominal Amount [plus accrued interest from [●]
6. [(i)] Specified Denominations: [ ] [[●] and integral multiples of [●] in excess thereof
[up to and including ●]. [No notes in definitive form will be
issued with a denomination above [●]]
[(ii) Calculation Amount [ ]]
7. [(i)] Issue Date: [ ]
[(ii) Interest Commencement Date: [ ] [Not Applicable]]
8. Maturity Date (for dated Notes only): [specify date or (for Floating Rate Notes) Interest Payment Date falling in the relevant month and year/Not Applicable]
9. [(i)] Interest Basis: [[●] per cent Fixed Rate]
[LIBOR/ EURIBOR]
+/- [●] per cent
Floating Rate]
[Zero Coupon]
(further particulars specified below)
133
[(ii)] Optional Deferral of interest for Subordinated Notes: [Applicable] [Not Applicable]
[(iii)] Optional Deferral limited to 5 years upon loss of
regulatory capital credit:
[Yes] [No]
[(iv)] Solvency Deferral of interest for Subordinated Notes: [Applicable] [Not Applicable]
[(v)] Relevant Entity: [ZIC] [ZIG]
[(vi)] Arrears of Interest payable at any time at Issuer’s
Election:
[Yes in whole [or in part]] [No]
10. Redemption/Payment Basis: [Redemption at par/ ● per cent of par]
11. Change of Interest or Redemption/Payment Basis: [●/ Not Applicable]
12. Put/Call Options: [Investor Put]
[Issuer Call]
[(further particulars specified below)]
13.[(i) Status of the Notes: [Unsubordinated/Subordinated]
[(ii)] [Status of the Guarantee: [Unsubordinated/Subordinated]
[(iii)] [Date [Board] approval for issuance of
Notes [and]Guarantee] obtained:
[ ] [and [ ], respectively]]
(N.B. Only relevant where Board (or similar) authorisation is required for the particular tranche of Notes or related Guarantee)]
[(iii)] Guarantee Amount (for Notes issued by Zurich Finance (Luxembourg) S.A.or Zurich Finance (UK) plc):
[ ]
14. Condition 7(b)(ix) to apply: [Yes] [No]
15. Initial Permitted Non-Qualifying Lender[s]: [ ]
Provisions Relating to Interest (if any) Payable
16. Fixed Rate Note Provisions: [Applicable/Not Applicable]
(If not applicable, delete the remaining sub-paragraphs of this paragraph)
(i) Rate[(s)] of Interest: [ ] per cent per annum [payable [annually/semi
annually/quarterly/monthly/other (specify)] in arrear]
(ii) Interest Payment Date(s): [ ] in each year
(iii) Fixed Coupon Amount[(s)]: [ ] per Calculation Amount
(iv) Broken Amount(s): [ ] per Calculation Amount payable on the interest
Payment Date falling [in/on] [ ]
(v) Fixed Day Count Fraction: [30/360/Actual/Actual ([ICMA] )
(vi) Determination Dates: [ ] in each year (insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon. N.B. only relevant where Day Count Fraction is Actual/Actual ([ICMA])
[(vii) Mid Swap Rate:] [Applicable/Not Applicable]
[(viii) Specified Mid Swap Rate:] [Not Applicable/[●]]
[(ix) Mid Swap Rate Screen Page:] [Not Applicable/[●]]
[(x) Reset Determination Date:] [Not Applicable/[●]]
[(xi) Reset Period:] [Not Applicable/[●]]
[(xii) Reset Margin:] [Not Applicable/[●]]
[(xiii) Reset Date:] [Not Applicable/[●]]
[(xiv) Specified Swap Duration:] [Not Applicable/[●]]
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[(xv) Swap Rate Determination Agent:] [Not Applicable/[●]]
17. Floating Rate Note Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph.)
(i) Interest Period(s): [ ]
(ii) Specified Interest Payment Dates: [ ]
(iii) First Interest Payment Dates: [ ]
(iv) Business Day Convention: [Floating Rate Convention/Following Business Day
Convention/Modified Following Business Day
Convention/Preceding Business Day Convention]
(v) Additional Business Centre(s): [ ]
(vi) Manner in which the Rate(s) of Interest is/are to be
determined:
[Screen Rate Determination/ISDA Determination]
(vii) Party responsible for calculating the Rate(s) of Interest
and Interest Amount(s) (if not the [Agent]):
[ ]
(viii) Screen Rate Determination:
– Reference Rate: [LIBOR/EURIBOR]
– Interest Determination Date(s): [ ]
– Relevant Screen Page: [ ]
(ix) ISDA Determination:
– Floating Rate Option: [Applicable/ Not Applicable]
– Designated Maturity: [ ]
– Reset Date: [ ]
(x) Margin(s): [+/-][ ] per cent per annum
(xi) Minimum Rate of Interest: [ ] per cent per annum
(xii) Maximum Rate of Interest: [ ] per cent per annum
(xiii) Day Count Fraction: [[Actual/Actual] [Actual/Actual/ ISDA] [Actual/365 (Fixed)]
[Actual/360] [30/360] [360/360] [Bond Basis] [30E/360]
[Eurobond Basis] [30E/360 (ISDA)]]
18. Zero Coupon Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)
(i) [Amortisation/Accrual] Yield: [ ] per cent per annum
(ii) Reference Price: [ ]
(iii) Any other formula/basis of determining amount
payable:
[ ]
Provisions Relating to Redemption
19. Call Option: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)
(i) Optional Redemption Date(s): [ ]
(ii) Optional Redemption Amount(s) of each Note and
method, if any, of calculation of such amount(s):
[ ] per Calculation Amount
(iii) If redeemable in part:
(a) Minimum Redemption Amount: [ ] per Calculation Amount
(b) Maximum Redemption Amount: [ ] per Calculation Amount
(iv) Notice period: [ ]
(v) Redemption of Subordinated Notes for Accounting
Event:
[Applicable/Not Applicable]
(vi) Initial Accounting Treatment Methodology: [liabilities/equity]
(vii) Redemption of Subordinated Notes for Capital Event: [Applicable/Not Applicable]
(viii) Redemption of Subordinated Notes for Regulatory [Applicable/Not Applicable]
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Event:
(ix) Regular Redemption Price: [ ] per Calculation Amount
(x) Special Redemption Price: [ ] per Calculation Amount
20. Put Option: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)
(i) Optional Redemption Date(s): [ ]
(ii) Optional Redemption Amount(s) of each Note: [ ] per Calculation Amount
(iii) Notice period: [ ]
21. Final Redemption Amount of each Note [ ] per Calculation Amount 22. Early Redemption Amount:
[ ]
Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default:
[ ]
23. Maturity Date of Dated Subordinated Notes extended upon a Solvency Event in accordance with Condition 6(a):
[Yes] [No]
General Provisions Applicable to the Notes
24. Form of Notes: Bearer Notes: [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes on 40 days’ notice/in the limited circumstances specified in the Permanent Global Note]
[Temporary Global Note exchangeable for Definitive Notes on [●] days notice]
[In the case of Bearer Notes whether Bearer Notes in definitive form may be exchanged for Registered Notes in accordance with Condition 10(a):]
[Yes/No]
[Permanent Global Note exchangeable for Definitive Notes on 40 days’ notice/in the limited circumstances specified in the Permanent Global Note]
[In the case of Reg. S Notes whether the Notes are to be represented on issue by a Reg. S Global Note or by Individual Registered Notes]:
Registered Notes: [Reg. S Global Note exchangeable into Individual Registered Notes if requested by the holder upon not less than 40 days’ notice/only in the limited circumstances described in the Base Prospectus] [Individual Registered Notes]
[In the case of Listed Swiss Franc Notes:] [Permanent Global SIS Note]
25. New Global Note Form: [Yes/No]
26. Payment Business Centre(s): [Not Applicable/[●]]
27. Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):
[Yes/No.]
28. Consolidation provisions:
(i) Listed Swiss Franc Note: [Yes/No]
(ii) Identity of Principal Paying Agent and other Paying Agents:
[ ]
29. Relevant Jurisdictions: [●]
30. Restricted Note (Condition 10(j) shall apply): [Yes] [No]
(i) Restricted Note Minimum Denomination Amount: [ ]
(ii) Restricted Note Transfer Amount: [ ]
(iii) Number of Permitted Non-Qualifying Lenders [ ]
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Responsibility
[(Relevant third party information) has been extracted from (specify source). The Issuer [and the Guarantor] confirm[s] that such
information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by (specify source), no facts have been omitted which would render the reproduced inaccurate or misleading.]
Signed on behalf of the Issuer:
By:.................................. By: …………………………
Duly authorised Duly authorised
[Signed on behalf of the Guarantor: By:.................................. By: …………………………….
Duly authorised Duly authorised]
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PART B — OTHER INFORMATION
1. Listing and Admission to Trading
(i) Listing: [Luxembourg/other (specify)/None].
(ii) Admission to trading: [Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the regulated market and
listed on the Official List of the Luxembourg Stock Exchange
with effect from [ ].] Application is expected to be made
by the Issuer (or on its behalf) for the Notes to be admitted to
trading on the regulated market and listed on the Official List of
the Luxembourg Stock Exchange with effect from [ ].]
[Not Applicable.] (Where documenting a fungible issue need to indicate that original Notes are already admitted to trading.)
(iii) Estimate of total expenses related to admission to trading: [ ]
2. Ratings:
Ratings: The Notes to be issued have been rated:
[S & P: [�]]
[Moody’s: [�]]
[[Other]: [�]]
[and endorsed by [insert details]]2
3. [Interests of Natural and Legal Persons Involved in the [Issue/Offer]
Need to include a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest. May be satisfied by the inclusion of the following statement:
“Save as discussed in [“Subscription and Sale”], so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer.”]
4. [Reasons for the Offer, Estimated Net Proceeds and Total Expenses
[(i) Reasons for the offer: [ ]
(See [“Use of Proceeds”] wording in Base Prospectus — if reasons for offer different from making profit and/or hedging certain risks will need to include those reasons here.)]
[(ii)] Estimated net proceeds: [ ]
(If proceeds are intended for more than one use will need to split out and present in order of priority. If proceeds insufficient to fund all proposed uses state amount and sources of other funding.)
[(iii) Estimated total expenses: [ ]. [Include breakdown of expenses.]
(Only necessary to include disclosure of net proceeds and total expenses at (ii) and (iii) above where disclosure is included at (i) above.)]]
5. [Yield (Fixed Rate Notes only)
Indication of yield: [ ]]
6. Operational Information
(i) ISIN Code: [ ]
(ii) Common Code: [ ]
(iii) Any clearing system(s) other than Euroclear Bank S.A./N.V. and Clearstream Banking société
anonyme and the relevant identification number(s):
[Not Applicable/[●]]
2 “and endorsed by…” Insert this wording where one or more of the ratings included in the Final Terms has been endorsed by
an EU registered credit rating agency for the purposes of Article 4(3) of the CRA Regulation.
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(iv) Delivery: Delivery [against/free of] payment
Names and addresses of initial Paying Agent(s): [ ]
(v) Names and addresses of additional Paying Agent(s)
(if any):
[ ]
(vi) Name and address of Common Safekeeper (if
applicable): [Euroclear, Boulevard du Roi Albert II, B-1210 Brussels, Belgium]
(vii) Intended to be held in a manner which would allow
Eurosystem eligibility:
[Yes. Note that the designation “yes” simply means that the Notes are
intended upon issue to be deposited with one of the ICSDs as common safekeeper [(and registered in the name of a nominee of one
of the ICSDs acting as common safekeeper,][include this text for registered notes] and does not necessarily mean that the Notes will be
recognised as eligible collateral for Eurosystem monetary policy and
intra day credit operations by the Eurosystem either upon issue or at
any or all times during their life. Such recognition will depend upon
the ECB being satisfied that Eurosystem eligibility criteria have been
met.] /
[No. Whilst the designation is specified as "no" at the date of these
Final Terms, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes
may then be deposited with one of the ICSDs as common safekeeper
[(and registered in the name of a nominee of one of the ICSDs acting
as common safekeeper,][include this text for registered notes] . Note
that this does not necessarily mean that the Notes will then be
recognised as eligible collateral for Eurosystem monetary policy and
intra day credit operations by the Eurosystem at any time during their
life. Such recognition will depend upon the ECB being satisfied that
Eurosystem eligibility criteria have been met.]
Distribution
7. (i) If syndicated, names of Managers:
[Not Applicable/give names]
(ii) Stabilising Manager(s) (if any): [Not Applicable/give names]
8. If non-syndicated, name of Dealer: [Not Applicable/give name]
9. U.S. Selling Restrictions: [Reg. S Compliance Category: TEFRA C/TEFRA D/TEFRA
not applicable]
10.Additional selling restrictions: [Not Applicable/Regulation S category 1/Regulation S
category 2/Regulation S category 3/give details]
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FORM OF FINAL TERMS OF THE CAPITAL NOTES
Final Terms dated [●]
Zurich Insurance Company Ltd Issue of [Aggregate Nominal Amount of Tranche] Capital Notes
under the USD18,000,000,000
Euro Medium Term Note Programme
Part A Contractual Terms
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions of Capital Notes set forth in the Base
Prospectus dated [●] [and the supplement to the Base Prospectus dated [●]] which [together] constitute[s] a base prospectus for
the purposes of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”). This document constitutes the
Final Terms of the Capital Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in
conjunction with such Base Prospectus [as so supplemented]. Full information on the Issuer and the offer of the Notes is only
available on the basis of the combination of these Final Terms and the Base Prospectus [as so supplemented]. [The Base Prospectus [and the supplement to the Base Prospectus] [is] [are] available for viewing on the website of the Luxembourg Stock
Exchange www.bourse.lu and at [website] [and] during normal business hours at [address] [and copies may be obtained from
[address].]
The following alternative language applies if the first tranche of an issue which is being increased was issued under a Base Prospectus with an earlier date.
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions of Capital Notes (the Conditions) set
forth in the Base Prospectus dated [original date] [and the supplement to the Base Prospectus dated [●].] This document
constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive (Directive
2003/71/EC) (the “Prospectus Directive”) and must be read in conjunction with the Base Prospectus dated [current date] [and the
supplement to the Base Prospectus dated [●]], which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive, save in respect of the Conditions which are extracted from the Base Prospectus dated [original date] [and the
supplement to the Base Prospectus dated [●]] and are attached hereto. Full information on the Issuer and the offer of the Notes is
only available on the basis of the combination of these Final Terms and the Base Prospectuses dated [original date] and [current
date] [and the supplements to the Base Prospectus dated [●] and [●]]. [The Base Prospectuses [and the supplements to the Base
Prospectus] are available for viewing on the website of the Luxembourg Stock Exchange www.bourse.lu and at [website] [and]
during normal business hours at [address] [and copies may be obtained from [address].]
[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote guidance for completing the Final Terms.]
[When completing final terms or adding any other final terms or information consideration should be given as to whether such terms or information constitute “significant new factors” and consequently trigger the need for a supplement to the Base Prospectus under Article 16 of the Prospectus Directive.]
1. [(i)] Series Number: [ ]
[(ii) Tranche Number: [ ]
(If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible).]
[ ]
2. Specified Currency or Currencies: [ ]
3. Aggregate Nominal Amount of Notes admitted to trading: [ ]
[(i)] Series: [ ]
[(ii) Tranche: [ ]]
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4. Issue Price: [ ] per cent of the Aggregate Nominal Amount [plus
accrued interest from [insert date] (if applicable)]
5. (i) Specified Denominations:** [ ]
[EUR 100,000 (or equivalent) and integral multiples of EUR 1,000 (or equivalent) in excess thereof up to and including
EUR 199,000 (or equivalent). No Notes in definitive form will
be issued with a denomination above EUR 199,000]*
(ii) Calculation Amount: [ ]
[Notes issued under the Programme which may be listed on the
Luxembourg Stock Exchange and/or admitted to listing,
trading and/or quotation by any other listing authority, stock
exchange and/or quotation system situated or operating in a
member state of the European Union may not have a minimum
denomination of less than EUR 100,000 (or its equivalent in
another currency)[, or (b) carry the right to acquire shares (or transferable securities equivalent to shares) issued by ZIC, ZF
(UK) or ZF (Luxembourg) or by any entity to whose group
ZIC, ZF (UK) or ZF (Luxembourg) belongs.]]
6. [(i)] Issue Date: [ ]
[(ii) Interest Commencement Date: [ ] [Not Applicable]]
7. Type of Note:
Solvency Deferred Interest Limitation:
Relevant Solvency Deferred Interest:
[Dated] [Undated]
[Applicable][Not Applicable]
[Applicable][Not Applicable]
8. Maturity Date (for dated Notes only): [specify date or (for Floating Rate Notes) Interest Payment Date falling in the relevant month and year/Not Applicable]
9. (i) Interest Basis: [ [●] per cent. Fixed Rate]
[specify reference rate]
+/- per cent. Floating Rate]
(further particulars specified below)
(ii) Solvency Event: [Applicable] [Not Applicable]
[Cumulative] [Non-Cumulative]
(iii) Trigger Event: [Applicable] [Not Applicable]
(iv) Optional Non-Payment: [Applicable] [Not Applicable]
[Cumulative] [Non-Cumulative]
(v) Optional Non-Payment limited to 5 years upon loss of regulatory capital credit:
[Yes] [No]
(vi) Relevant Entity: [ZIC/ZIG]
(vii) Cash Settlement: [Applicable] [Not Applicable]
_______
* This wording must be included in the case of an issue of Notes where the Specified Denominations are minimum
denominations of EUR 100,000 (or equivalent) and integral multiples of EUR 1,000 (or equivalent).
** If the Maturity date of the Notes (including Notes denominated in sterling) is less than one year from the Issue Date and either
(a) the issue proceeds are received by the relevant Issuer in the United Kingdom or (b) the activity of issuing the Notes is
carried on from an establishment maintained by the relevant Issuer in the United Kingdom, (i) the Notes must have a minimum
redemption value of £100,000 (or its equivalent in other currencies) or (ii) another applicable exemption from section 19 of the
FSMA must be available.
141
(viii) APM Settlement: [Applicable. Time period from the beginning of deferral upon which Deferred Interest is cancelled to the extent not settled via APM is [●]]
[Applicable in respect of Relevant Solvency Deferred Interest only. Time period from the beginning of deferral upon which Deferred Interest is cancelled to the extent not settled via APM is [●] ]
[Not Applicable]
(ix) Commercially Reasonable Efforts: [Applicable time period during which Issuer and ZIG shall continue to use their commercially reasonable efforts to operate the APM is [●]] [Not Applicable]
(x) Intention Statement: [Applicable. Time period for which Issuer and ZIG intend to continue to voluntarily operate the APM in relation to Optionally Deferred Interest or Solvency Deferred Interest is [●]]] [Not Applicable]
(xi) Period for purposes of limb (vi) of definition of APM Deferred Settlement Date:
[Not Applicable]/[ ]
(xii) Cash Deferred Settlement Date applicable limbs: [Limbs (iv) and/or (vi) [apply]/[do not apply]]
(xiii) Condition 3(e)(vi) to apply: [Yes] [No]
(xiv) Condition 3(d) to apply: [Yes] [No]
10. Redemption/Payment Basis: [Redemption at par/ ● per cent of par]
11. Change of Interest or Redemption/Payment Basis: [Specify details of any provision for convertibility of Notes into another interest or redemption/payment basis]
12. Call Option: [Issuer Call]
[(further particulars specified below)]
13. Date [Board] approval for issuance of Notes obtained: [ ]
14. Method of distribution: [Syndicated/Non-syndicated]
15. Condition 7(b)(ix) to apply: [Yes][No]
16. Initial Permitted Non-Qualifying Lender[s]: [ ]
Provisions Relating to Interest (if any) Payable
17. Fixed Rate Note Provisions [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)
(i) Rate[(s)] of Interest: [ ] per cent per annum [payable [annually/semi annually/quarterly/monthly/other (specify)] in arrear]
(ii) Interest Payment Date(s): [ ] in each year
(iii) Fixed Coupon Amount[(s)]: [ ] per Calculation Amount
(iv) Broken Amount(s): [ ] per Calculation Amount payable on the interest Payment Date falling [in/on] [ ]
(v) Day Count Fraction: [30/360]/[Actual/Actual (ICMA)]
(vi) Determination Dates: [ ] in each year (insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon. N.B. only relevant where Day Count Fraction is Actual/Actual (ICMA)
(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:
[Not Applicable/give details]
[(viii) Mid Swap Rate:] [Applicable/Not Applicable]
[(ix) Specified Mid Swap Rate:] [Not Applicable/give details]
[(x) Mid Swap Rate Screen Page:] [Not Applicable/give details]
[(xi) Reset Determination Date:] [Not Applicable/give details]
[(xii) Reset Period:] [Not Applicable/give details]
[(xiii) Reset Margin:] [Not Applicable/give details]
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[(xiv) Reset Date:] [Not Applicable/give details]
[(xv) Specified Swap Duration:] [Not Applicable/give details]
[(xvi) Swap Rate Determination Agent:] [Not Applicable/give details]
18. Floating Rate Note Provisions: [Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph. Also consider whether EURO BBA LIBOR or EURIBOR is the appropriate reference rate)
(i) Specified Period(s): [ ]
(ii) Interest Payment Dates: [ ]
(iii) First Interest Payment Dates: [ ]
(iv) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)]
(v) Additional Business Centre(s): [ ]
(vi) Manner in which the Rate(s) of Interest is/are to be determined:
[Screen Rate Determination/ISDA Determination]
(vii) Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the [Agent]):
[ ]
(viii) Screen Rate Determination:
– Reference Rate: [ ]
– Interest Determination Date(s): [ ]
– Relevant Screen Page: [ ]
(ix) ISDA Determination:
– Floating Rate Option: [ ]
– Designated Maturity: [ ]
– Reset Date: [ ]
(x) Margin(s): [+/-][ ] per cent per annum
(xi) Minimum Rate of Interest: [ ] per cent per annum
(xii) Maximum Rate of Interest: [ ] per cent per annum
(xiii) Day Count Fraction: [Actual/Actual]/[Actual/Actual]/[ISDA/Actual 365]
(Fixed)/Actual/360/30/360/360/360/Bond
Basis/30E/360/Eurobond Basis/30E/360 (ISDA)]
(xiv) Fall back provisions, rounding provisions, denominator and any other terms relating to the method of calculating interest on Floating Rate Notes, if different from those set out in the Conditions:
[ ]
Provisions Relating to Redemption
19. Call Option: Applicable
(i) Optional Redemption Date(s): [ ] [NB: This should take account of any regulatory requirements as to minimum periods for call options].
(ii) Optional Redemption Amount(s) of each Note and method, if any, of calculation of such amount(s):
[ ] per Calculation Amount
(iii) If redeemable in part:
(a) Minimum Redemption Amount: [ ] per Calculation Amount
(b) Maximum Redemption Amount: [ ] per Calculation Amount
(iv) Notice period: [ ]
20.(i) Accounting Event [Yes/No]
(ii) Initial Accounting Treatment Methodology:
[liabilities/equity]
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21. Capital Event: [Yes/No]
22. Regulatory Event: [Yes/No]
23. Final Redemption Amount of each Note: [ ] per Calculation Amount
24. Early Redemption Amount: [ ]
Special Redemption Price: [ ]
Regular Redemption Price: [ ]
25. Maturity Date of Dated Capital Notes
extended upon a Solvency Event in
accordance with Condition 6(c):
[Yes] [No]
26.(i) Maximum Period of Notice
(ii) Minimum Period of Notice
[●] days
[●] days
General Provisions Applicable to the Notes
27. Form of Notes: Bearer Notes: [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes on 40 days’ notice/in the limited circumstances specified in the Permanent Global Note]
[Temporary Global Note exchangeable for Definitive Notes]
[Permanent Global Note exchangeable for Definitive Notes on 40 days’ notice/in the limited circumstances specified in the Permanent Global Note]
[In the case of Bearer Notes whether Bearer Notes in definitive form may be exchanged for Registered Notes in accordance with Condition 10(a):]
[Yes/No]
Registered Notes: [Reg. S Global Note and/or Individual Registered Notes (Specify whether/in what circumstances interests in the relevant Reg. S Global Note will be exchangeable for Individual Registered Notes and vice versa).]
[Listed Swiss Franc Notes: Permanent Global SIS Note]
28. Payment Business Centre(s) or other special provisions relating to Payment Days for the purpose of Condition 5(c):
[Not applicable/give details. Note that this item relates to the date and place of payment, and not interest period end dates, to which item 18(v) relates]
29. Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):
[Yes/No. If yes, give details]
30. Principal Paying Agent: [ ]
31. Relevant Jurisdictions: [Specify if different from those set out in Condition 6(b)]
32. Restricted Capital Note (Condition 10(j) shall apply):
[Yes][No]
(i) Restricted Capital Note Minimum Denomination Amount:
[ ]
(ii) Restricted Capital Note Transfer Amount:
[ ]
(iii)Number of Permitted Non-Qualifying Lenders:
[ ]
Responsibility
The Issuer accepts responsibility for the information contained in these Final Terms. [(Relevant third party information) has been
extracted from (specify source). The Issuer confirms that such information has been accurately reproduced and that, so far as it is
aware, and is able to ascertain from information published by (specify source), no facts have been omitted which would tender the
reproduced inaccurate or misleading.]
Signed on behalf of the Issuer: By:.................................. By: …………………………
Duly authorised Duly authorised
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PART B — OTHER INFORMATION
1. Listing and Admission to Trading
(i) Listing: [Luxembourg/other (specify)/None].
(ii) Admission to trading: [Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the regulated market and listed on the Official List of the Luxembourg Stock Exchange with effect from [ ].] Application is expected to be made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the regulated market and listed on the Official List of the Luxembourg Stock Exchange with effect from [ ].] [Not Applicable.] (Where documenting a fungible issue need to indicate that original Notes are already admitted to trading.)
(iii) Estimate of total expenses related to admission to trading:
[ ]
2. Ratings
Ratings: The Notes to be issued have been rated:
[S & P: [�]]
[Moody’s: [�]]
[[Other]: [�]]
[and endorsed by [insert details]]3
(The above disclosure should reflect the rating allocated to Notes of the
type being issued under the Programme generally or, where the issue has
been specifically rated, that rating.)
Insert one (or more) of the following options, as applicable:
[[insert legal name of particular credit rating agency entity providing
rating] is established in the EU and has applied for registration under
Regulation (EC) No 1060/2009 (the "CRA Regulation"), although the
result of such application has not yet been determined.]
[[insert legal name of particular credit rating agency entity providing
rating] is established in the EU and registered under Regulation (EC) No
1060/2009 (the "CRA Regulation").]
[[insert legal name of particular credit rating agency entity providing rating] is not established in the EU and is not certified under Regulation
(EC) No 1060/2009 (the "CRA Regulation") and the rating it has given to the [Notes] is not endorsed by a credit rating agency established in the
EU and registered under the CRA Regulation.]
[[insert legal name of particular credit rating agency entity providing rating] is established in the EU and is neither registered nor has it applied
for registration under Regulation (EC) No 1060/2009 (the "CRA
Regulation").]
[[insert legal name of particular credit rating agency entity providing rating] is not established in the EU but the rating it has given to the
[Notes] is endorsed by [insert legal name of credit rating agency], which
is established in the EU and registered under Regulation (EC) No 1060/2009 (the "CRA Regulation").]
[[insert legal name of particular credit rating agency entity providing rating] is not established in the EU but is certified under Regulation (EC)
No 1060/2009 (the "CRA Regulation").]
3 “and endorsed by…” Insert this wording where one or more of the ratings included in the Final Terms has been endorsed by
an EU registered credit rating agency for the purposes of Article 4(3) of the CRA Regulation.
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3. [Interests of Natural and Legal Persons Involved in the [Issue/Offer]
Need to include a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest. May be satisfied by the inclusion of the following statement:
“Save as discussed in [“Subscription and Sale”], so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer.”]
4. [Reasons for the Offer, Estimated Net Proceeds
and Total Expenses:
[(i) Reasons for the offer: [ ]
(See [“Use of Proceeds”] wording in Base Prospectus — if reasons for offer different from making profit and/or hedging certain risks will need to include those reasons here.)]
[[(ii)] Estimated net proceeds: [ ]
(If proceeds are intended for more than one use will need to split out and present in order of priority. If proceeds insufficient to fund all proposed uses state amount and sources of other funding.)]
[[(iii) Estimated total expenses: [ ]
[Include breakdown of expenses.]
(Only necessary to include disclosure of net proceeds and total expenses at (ii) and (iii) above where disclosure is included at (i) above.)]]
5. [Yield (Fixed Rate Notes only)
Indication of yield: [ ]] 6. Operational Information
(i) ISIN Code: [ ]
(ii) Common Code: [ ]
(iii) Any clearing system(s) other than Euroclear Bank S.A./N.V. and Clearstream Banking société anonyme and the relevant identification number(s): [Not Applicable/give name(s) and number(s)]
(iv) Delivery: Delivery [against/free of] payment
(v) Names and addresses of initial Paying Agent(s): [ ]
(vi) Names and addresses of additional Paying Agent(s) (if any): [ ]
(vii) Name and address of Common Safekeeper (if applicable): [Euroclear, Boulevard du Roi Albert II, B-1210 Brussels, Belgium]
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GENERAL INFORMATION
1. The update of the Programme and the issue of Notes has been duly authorised by resolutions of the Board of Directors of ZF
(Luxembourg) and ZF (UK), both dated 12 May 2014. The update of the Programme and the issue and guarantee of Notes
has been duly authorised by resolutions of the Board of Directors of ZIC dated 20 and 21 October 2009 and 4 May 2011.
2. Application has been made for Notes issued under the Programme to be admitted to trading on the regulated market, and
listed on the Official List, of the Luxembourg Stock Exchange.
3. So long as Notes are capable of being issued under the Programme, copies of the documents are, or will, when published, be
available free of charge from the registered office of each Issuer and from the specified offices of the Paying Agent for the
time being in Luxembourg and the documents set out in paragraph (iv) and (v) below will also be available for viewing on
the Luxembourg Stock Exchange website at www.bourse.lu:
(i) the constitutional documents (with, if applicable, an English translation thereof) of each Issuer;
(ii) the most recent audited annual financial statements of ZF (Luxembourg), ZF (UK) and ZIC (in each case with, if
applicable, an English translation thereof). Neither ZF (Luxembourg), ZF (UK) nor ZIC are required to publish interim
accounts;
(iii) the Dealer Agreement, the Trust Deed, the Agency Agreement, the forms of the bearer and registered Global Notes and
the Notes in bearer definitive and individual registered form, the Coupons, the Talons, each Senior ZIC Guarantee, each
Subordinated ZIC Guarantee and each agency agreement entered into in relation to an issue of Listed Swiss Franc
Notes (which will contain the form of permanent global certificate in respect of such Notes);
(iv) a copy of this Base Prospectus;
(v) any future base prospectuses, information memoranda and supplements to this Base Prospectus and any other documents incorporated herein or therein by reference, and Final Terms (save that Final Terms relating to a Note which
is not admitted to listing, trading and/or quotation by any stock exchange, listing authority and/or quotation system will
only be available for inspection at the registered office of the relevant Issuer by a holder of such Note and such holder
must produce evidence satisfactory to the relevant Issuer as to its holding and identity); and
(vi) in the case of each issue of listed Notes subscribed pursuant to a subscription agreement, the subscription agreement (or
equivalent document).
4. The Notes have been accepted for clearance through Euroclear (Boulevard du Roi Albert II B-1210 Brussels, Belgium),
Clearstream (42 Avenue J F Kennedy, 1855 Luxembourg), Luxembourg and SIS. The appropriate Common Code and ISIN
for each Tranche of Notes allocated by Euroclear and Clearstream, Luxembourg or SIS will be specified in the relevant Final Terms. The CUSIP numbers for each Tranche of Registered Notes, together with the relevant ISIN and common code, if
applicable, will be specified in the applicable Final Terms. If the Notes are to clear through an additional or alternative
clearing system the appropriate information will be specified in the relevant Final Terms.
5. The auditors of ZIC, for the years commencing 1 January 2013 and 2012, are PricewaterhouseCoopers AG, Birchstrasse
160, 8050 Zurich, Switzerland who are members of the Swiss Institute of Certified Accountants and Tax Consultants. The
auditors of ZF (Luxembourg), for the years commencing 1 January 2013 and 2012, are PricewaterhouseCoopers Société
coopérative, 400, route d’Esch, B. P. 1443, 1014 Luxembourg, Luxembourg who are members of the Institut des Réviseurs
d’Entreprises. The auditors of ZF (UK), for the years commencing 1 January 2013 and 2012, are PricewaterhouseCoopers
LLP, 31 Great George Street, Bristol BS1 5QD, United Kingdom who are members of the Institute of Chartered Accountants
of England and Wales. The financial statements of the Issuers and the Guarantor have been audited by their respective
auditors.
6. Since 31 December 2013 there has been no material adverse change in the prospects of ZIC, ZF (Luxembourg), ZF (UK) or
the ZIC Group.
7. Since 31 December 2013 there has been no significant change in the financial or trading position of ZIC, ZF (Luxembourg),
ZF (UK) or the ZIC Group.
8. Save as disclosed in this Base Prospectus on pages 108-109, there are no governmental, legal or arbitration proceedings (or
any such proceedings which are pending or threatened of which any of the Issuers is aware) during the 12 months before the
date of publication of this Base Prospectus which may have or have had in the recent past, significant effects on the financial
position or profitability of any of the Issuers or on the ZIC Group.
9. Certain of the Dealers and their affiliates have engaged, and may in the future engage, in investment banking and/or
commercial banking transactions with, and may perform services for, the Issuers, the Guarantor and their affiliates in the
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147
ordinary course of business. In addition, in the ordinary course of their business activities, the Dealers and their affiliates
may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities)
and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such
investments and securities activities may involve securities and/or instruments of the Issuers, the Guarantor or the Issuer’s or the Guarantor’s affiliates. Certain of the Dealers or their affiliates that have a lending relationship with the Issuers or the
Guarantor routinely hedge their credit exposure to the Issuers or the Guarantor in accordance with their customary risk
management policies. Typically, such Dealers and their affiliates would hedge such exposure by entering into transactions
which consist of either the purchase of credit default swaps or the creation of short positions in securities, including
potentially the Notes issued under the Programme. Any such short positions could adversely affect future trading prices of
Notes issued under the Programme. The Dealers and their affiliates may also make investment recommendations and/or
publish or express independent research views in respect of such securities or financial instruments and may hold, or
recommend to clients that they acquire, long and/or short positions in such securities and instruments.
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THE ISSUERS
Zurich Finance (Luxembourg) S.A. 26, Boulevard Royal
L-2449 Luxembourg
Zurich Finance (UK) plc The Grange
Bishops Cleeve Cheltenham
Gloucestershire, GL52 8XX United Kingdom
Zurich Insurance Company Ltd
Mythenquai 2 CH-8002 Zurich
Switzerland
THE GUARANTOR
(in respect of Notes issued by
ZF (Luxembourg) and ZF (UK))
Zurich Insurance Company Ltd Mythenquai 2
CH-8002 Zurich
Switzerland
THE AGENT AND REGISTRAR THE TRUSTEE
Citibank, N.A.
Citigroup Centre Canada Square
London E14 5LB
United Kingdom
Citicorp Trustee Company Limited Citigroup Centre Canada Square
London E14 5LB
United Kingdom
THE PAYING AGENT AND TRANSFER AGENT
Banque Internationale à Luxembourg 69, route d’Esch
L-2953 Luxembourg
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149
LEGAL ADVISERS
To Zurich Insurance Company Ltd and Zurich Finance (UK) plc
Freshfields Bruckhaus Deringer LLP 65 Fleet Street
London EC4Y 1HS United Kingdom
To Zurich Finance (Luxembourg) S.A. Arendt & Medernach
14, rue Erasme L-2082 Luxembourg
Luxembourg
To Zurich Insurance Group Ltd and
Zurich Insurance Company Ltd Homburger AG
Prime Tower Hardstrasse 201 CH-8005 Zurich
Switzerland
To the Dealers and the Trustee in England
Linklaters LLP One Silk Street
London EC2Y 8HQ
United Kingdom
STATUTORY AUDITORS TO ZF (LUXEMBOURG)
PricewaterhouseCoopers Société coopérative 400, route d’Esch
B.P. 1443 L-1014 Luxembourg
AUDITORS TO ZF (UK) PricewaterhouseCoopers LLP
31 Great George Street Bristol
BS1 5QD United Kingdom
AUDITORS TO ZURICH INSURANCE COMPANY LTD
PricewaterhouseCoopers AG Birchstrasse 160
Postfach CH-8050 Zurich
Switzerland
150
THE DEALERS
Barclays Bank PLC 5 The North Colonnade
Canary Wharf London E14 4BB United Kingdom
BNP PARIBAS 10 Harewood Avenue
London NW1 6AA United Kingdom
Citigroup Global Markets Limited
Citigroup Centre Canada Square Canary Wharf
London E14 5LB United Kingdom
Commerzbank Aktiengesellschaft Kaiserstaße 16 (Kaiserplatz) 60311 Frankfurt am Main
Federal Republic of Germany
Crédit Agricole Corporate and Investment Bank
9, quai du Président Paul Doumer 92920 Paris La Défense Cedex
France
Credit Suisse Securities (Europe) Limited One Cabot Square London E14 4QJ United Kingdom
Deutsche Bank AG, London Branch
Winchester House 1 Great Winchester Street
London EC2N 2DB United Kingdom
Goldman Sachs International Peterborough Court
133 Fleet Street London EC4A 2BB
United Kingdom
HSBC Bank plc 8 Canada Square London E14 5HQ United Kingdom
J.P. Morgan Securities plc 25 Bank Street Canary Wharf
London E14 5JP United Kingdom
Merrill Lynch International
2 King Edward Street London EC1A 1HQ
United Kingdom
Morgan Stanley & Co. International plc 25 Cabot Square Canary Wharf
London E14 4QA United Kingdom
The Royal Bank of Scotland plc
135 Bishopsgate London EC2M 3UR
United Kingdom
UBS Limited 1 Finsbury Avenue
London EC2M 2PP
United Kingdom
LUXEMBOURG LISTING AGENT
Banque Internationale à Luxembourg 69, route d’Esch
L-2953 Luxembourg
43
REGISTERED OFFICE OF THE ISSUER
2 Grand Canal Square Grand Canal Harbour
Dublin 2 Ireland
MANAGERS
Citigroup Global Markets
Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
Crédit Agricole Corporate
and Investment Bank
9 quai du Président Paul
Doumer
92920 Paris- La-Défense
Cedex
France
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London E14 5JP
United Kingdom
Morgan Stanley & Co.
International plc
25 Cabot Square
Canary Wharf
London E14 4QA
United Kingdom
TRUSTEE AND MANAGERS’ TRUSTEE DISPOSAL AGENT
Citicorp Trustee Company Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
ISSUING AND PAYING AGENT,
CALCULATION AGENT AND CUSTODIAN
REGISTRAR AND ENFORCEMENT AGENT
Citibank, N.A. London Branch
Citigroup Centre
Canada Square
London E14 5LB
Citigroup Global Markets Deutschland AG
Reuterweg 16
60323 Frankfurt am Main
Germany
IRISH LISTING AGENT
Arthur Cox Listing Services Limited
Earlsfort Centre
Earlsfort Terrace
Dublin 2
Ireland
LEGAL ADVISERS
to the Managers
as to English law
to the Issuer
as to Irish law
to the Collateral Issuer
as to Swiss law
to the Collateral Issuer as
to English law
Linklaters LLP
One Silk Street
London
EC2Y 8HQ
A&L Goodbody
International Financial
Services Centre
North Wall Quay
Dublin 1
Homburger AG
Prime Tower
Hardstrasse 201
CH-8005 Zurich
Freshfields Bruckhaus Deringer LLP
65 Fleet Street
London EC4Y 1HT
A18079943
